The international poverty line at $1.90 a day at purchasing power parity means that in each country the poverty line is the amount that will allow you to buy a basket of goods equivalent to what $1.90 would buy:
A. in the United States.
B. in the richest of the countries that uses the index.
C. in the poorest of the countries that uses the index.
D. in the average economy of all the countries that use the index.
A. in the United States.
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In the presence of compensating wage differentials, explain why the consumption possibility frontier is not a good approximation of the utility possibility frontier.
What will be an ideal response?
The difference between nominal and real is
A) nominal is measured in current dollars and real is measured in dollars of a given year. B) real is measured in current dollars and nominal is measured in dollars of a given year. C) nominal is a number stated in dollars and real is stated with an index number. D) real is a number stated in dollars and nominal is stated with an index number. E) both nominal and real are measured with index numbers, only the nominal index is greater than 100 and the real index is less than 100.
A Commodity X will be considered as a normal good if:
a. the quantity of the good consumed decreases with an increase in income. b. the quantity of the good consumed increases with an increase in income. c. the quantity of the good consumed increases in the same proportion as the increase in income. d. the quantity of the good consumed reflects no change with a change in income.
Workers in country A receive an increase in wages of 10 percent at the same time the inflation rate in country A is 8 percent. Workers in country B receive an increase in wages of 3 percent and the inflation rate in country B is 1 percent. In which country are workers better off?
A. Country A because their real wages rise by 18 percent. B. Country A because their real wages rise by 10 percent. C. Country B because the inflation rate is lower. D. Neither country because the increase in real wages is the same.