If the price of housing (which accounts for 40 percent of total expenditures in the CPI basket), rises by 10 percent in one year while the prices of all other goods rises by 27 percent, by how much will the CPI rise?
A. 234 percent
B. 10 percent
C. 27 percent
D. 20 percent
Answer: D
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A conflict between an owner and a manager may occur when
A) the manager earns more when the firm has higher profits. B) the manager is seeking to maximize leisure time. C) the owner can easily observe the manager slacking off and punish him accordingly. D) the firm is very small and the manager must perform multiple tasks.
Supporters of raising the minimum wage argue that minimum-wage laws are
a. a tax-free way to help the working poor. Businesses bear the burden of paying higher wages, not the government. b. better than the Earned Income Tax Credit (EITC) in targeting the working poor. The EITC may benefit teenagers from middle-class families who work summer jobs at the minimum wage. c. better than in-kind transfers such as food stamps in providing food rather than unhealthy items such as drugs or alcohol. d. a way to increase employment of those likely to earn the minimum wage.
If the Fed were to increase the discount rate so that it was much higher than the federal funds rate, eventually
A) reserves would decrease and the money supply would decrease. B) reserves would increase and the money supply would increase. C) reserves would decrease and the money supply would increase. D) reserves would increase and the money supply would decrease. E) there is no impact on reserves or the money supply.
If the U.S. government went from a budget deficit to a budget surplus then
a. the interest rate and the real exchange rate would increase. b. the interest rate and the real exchange rate would decrease. c. the interest rate would increase and the real exchange rate would decrease. d. the interest rate would decrease and the real exchange rate would increase.