Lorrie will receive a nominal wage increase of 10 percent this year. The inflation rate was 5 percent last year and is predicted to be 8 percent this year. If the economic forecast is correct, her real wage this year
a. will increase by approximately 2 percent
b. will increase by approximately 8 percent
c. will increase by approximately 5 percent
d. will remain the same
e. cannot be calculated without knowing the number of dollars by which her wage increases
A
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Which of the following statements is true?
A) The principle of comparative advantage provides a basis for trade when two nations have the same opportunity cost of producing a good. B) The principle of absolute advantage provides a basis for the determination of the terms of trade between two trading nations. C) The principle of absolute advantage forms the basis of trade when a nation can produce more of all the goods and services compared to the other nations. D) The principle of comparative advantage provides a range of prices within which trade will occur.
If a fair gamble is played many times, the combined monetary losses or gains will
a. approach zero. b. be negative. c. be positive. d. result in an outcome that cannot be determined without more information.
When the rate of interest (or price of capital) decreases, the
a. quantity demanded of loanable funds by the firm will decrease b. quantity demanded of loanable funds by the firm will increase c. firm's MRP of capital increases d. firm's MPP of capital increases e. firm's MRP of capital decreases
Within the framework of the Keynesian model, which of the following would most likely occur if the federal government increased its spending and enlarged the size of the budget deficit during a period of full employment?
a. The rate of inflation would decline. b. The rate of inflation would rise. c. A recession would develop. d. Interest rates would fall.