If real salaries increase but nominal salaries do not, this means that:
A. the purchasing power of money has decreased.
B. prices have not changed.
C. prices have risen.
D. prices have fallen.
Answer: D
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Inflation ________ the cost of holding money and ________ the after-tax real interest rate
A) decreases; increases B) increases; decreases C) increases; increases D) decreases; decreases E) increases; does not change
Which of the following is true of inflation?
a. It is an increase in the general price level of goods and services. b. The purchasing power of money increases as the result of inflation. c. Inflation is similar to interest payments on future money income, such as pensions and receipts from outstanding loans. d. Inflation has no effect on real income.
According to the research of Christina Romer and David Romer:
A. a tax reduction of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent. B. a tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent. C. a tax reduction of 2 to 3 percent raises real GDP by roughly 1 percent. D. a tax increase of 2 to 3 percent lowers real GDP by roughly 1 percent.
Use the information provided in Table 7.4 below to answer the question(s) that follow. Table 7.4Inputs Required to Produce a Product Using Alternative TechnologiesTechnologyUnits of CapitalNumber of EmployeesA 836B 1224C 1616D 24 12Refer to Table 7.4. If the hourly price of capital is $40 and the hourly wage rate is $10, which production technology should be selected?
A. A B. B C. C D. D