Suppose a recent college graduate has an annual nominal income of $42,000 for the first year she works. If the annual inflation rate is 5 percent, what salary would she need in the second year to maintain the same real income?
a) $39,900
b) $42,500
c) $44,100
d) $42,000
Answer: c) $44,100
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Betty is maximizing her satisfaction from spending her budget on two items: movie rentals and music downloads. If the marginal utility she receives from the last movie rental is twice that from the last music download, what is the price of a movie rental if the price of a music download is $0.80?
A. $0.40 B. $1.60 C. $0.80 D. $1.20
From the date a U.S. patent is granted to a firm, it ceases to be a potential source of monopoly profits after
A) 20 years. B) 14 years. C) 10 years. D) 7 years.
Which of the following will shift the demand for the euro to the right?
A) expectations among speculators that the price of the euro will rise in the future B) an increase in incomes in countries that buy goods from the European Union C) an increase in interest rates in the European Union D) All of the above will shift the demand for the euro to the right.
Full-employment output is the level of output that firms in the economy supply when
A) taxes are zero. B) wages and prices have fully adjusted. C) the unemployment rate is zero. D) all capital is fully utilized.