Leo is a welfare recipient who qualifies for two means-tested cash benefit programs. If he does not earn any income, he receives $225 from each program. For each dollar he earns (which his employer is required to report to the welfare agency), his benefit from each program is reduced by 75 cents until the benefit equals zero. When Leo's earnings are less than $300, each extra dollar he earns causes his total income (earnings plus benefits) to:
A. rise by 75 cents.
B. fall by 25 cents.
C. fall by 50 cents.
D. rise by 50 cents.
Answer: C
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The LM curve is the combinations of
A) the output gap and the real interest rate for which the money market is in equilibrium. B) the inflation rate and nominal interest rate for which the money market is in equilibrium. C) the inflation rate and real interest rate for which the money market is in equilibrium. D) the inflation rate and real interest rate for which the goods market is in equilibrium.
Consider the following data: currency (held outside banks) = $354 billion, checkable deposits = $250 billion, traveler's checks = $4 billion, small-denomination time deposits = $200 billion, savings deposits = $100 billion, retail money market mutual funds = $160 billion. M1 equals __________ billion and M2 equals __________ billion
A) $608; $1,068 B) $708; $1,038 C) $708; $948 D) $694; $1,038 E) none of the above
________ determine(s) which products have been produced within a free-trade area and which products have been produced outside the area and therefore are subject to trade barriers.
A. Rules of origin B. Trade diversion C. The most favored nation principle D. Trade creation
The relationship between the producer price index (PPI) and the consumer price index (CPI) is such that, in the short run
A. the PPI usually increases before the CPI. B. the CPI and the PPI usually move in opposite directions. C. the CPI usually increases before the PPI. D. the CPI and the PPI usually move simultaneously.