If the inflation rate is 2 percent and nominal wages increase by 1 percent, what happens to real wages?
a. They rise by 1 percent.
b. They fall by 1 percent.
c. They remain constant.
d. They fall by 2 percent.
e. They rise by 3 percent.
B
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The process by which economists test hypotheses against facts to develop theories, principles, and models is called
A. the economic perspective. B. the scientific method. C. policy economics. D. microeconomics.
The table below describes the value added in the production of a gallon of gasoline by each stage of production. (The values are hypothetical.)
Table 19-10 Stage of Production Value of Sales Value Added Oil drilling 0.75 Refining 1.25 Shipping 1.85 Retail sales 3.65 a) What is the value added by each stage of production? b) What is the total value added? For simplicity, you can ignore the cost of the inputs for oil drilling.
The relationship between the government deficit and the change in the monetary base is
A) deficit equals change in government debt held by the public minus change in monetary base. B) deficit equals change in government debt held by the public plus change in monetary base. C) deficit equals change in government debt outstanding plus change in monetary base. D) deficit equals change in government debt outstanding minus change in monetary base.
Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfare is $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1,400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfare is $450. What is the opportunity cost of using the coupon for the Miami trip?
A. $450 B. $100 C. $500 D. $550