Elizabeth just received her Ph.D. in economics and has two competing job offers. The first is in Washington, D.C. and pays a salary of $200,000 . She has a similar job offer in Austin, TX that pays $90,000 . Which pair of CPIs would make the two salaries have the same purchasing power?
a. 70 in Washington, D.C. and 42 in Austin, TX
b. 140 in Washington, D.C. and 70 in Austin, TX
c. 160 in Washington, D.C. and 72 in Austin, TX
d. 210 in Washington, D.C. and 150 in Austin, TX
c
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Differentiate between an open and a closed economy? Do you agree that the U.S. economy is more open among the advanced industrial countries in the world?
What will be an ideal response?
Lenders generally want a higher interest rate to compensate them when loans stretch over a longer period because:
A. the opportunity cost increases over time. B. there's more uncertainty about potential future investment opportunities. C. lenders want to be compensated for being unable to get their money back quickly. D. All of these are true.
Even if the Fed attempts to control an asset bubble by raising interest rates to any reasonable degree, it is not clear that overly-optimistic investors would respond
a. True b. False
When the invisible hand is at work,
a. the price system will sometimes give incorrect cost signals to consumers. b. the price system will allocate resources based only on consumer need. c. all prices will be set equal to marginal costs. d. there will be some shortages and surpluses that cannot be avoided.