The real wage rate is defined as the wage rate divided by
A. the interest rate.
B. the money supply.
C. nominal GDP.
D. the price level.
Answer: D
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In the income-expenditure model, equilibrium output is the level of output at which the 45-degree line intersects the planned expenditures line. Explain why this output level is an equilibrium level
Illustrate your answer with a diagram of the income-expenditure model.
When the real interest rate rises, there is
A) neither a shift of the consumption function nor a movement along the consumption function. B) a downward shift of the consumption function. C) a downward movement along the consumption function. D) an upward shift of the consumption function. E) an upward movement along the consumption function.
Refer to Figure 7.1. Suppose the city passes an ordinance banning loud music, and this directly impacts Angus's legal ability to play his bagpipes. The benevolent social planner would choose an outcome where Angus ________ and Dudley ________
A) plays the bagpipes; does nothing B) plays the bagpipes; calls the police C) mops floors; does nothing D) mops floors; calls the police
If cheese spreads and butter are substitutes, an increase in the price of butter will:
a. shift the demand curve for cheese spreads upward. b. shift the demand curve for cheese spreads downward. c. shift the demand curve for butter upwards. d. shift the demand curve for butter downward.