A labor contract provides for a first-year wage of $10 per hour, and specifies that the real wage will rise by 3 percent in the second year of the contract. The CPI is 1.00 in the first year and 1.07 in the second year. What dollar wage must be paid in the second year?
A. $10.90
B. $10.70
C. $11.02
D. $10.30
Answer: C
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Long-run macroeconomic equilibrium is achieved when the money wage rate has adjusted so that employment is such that real GDP equals potential GDP
Indicate whether the statement is true or false
All of the following would be potential problems if developing nations around the world emphasized export promotion EXCEPT
A) industrial nations may be unable to absorb the exports of many newly industrializing nations. B) it would be much harder to emphasize exports under the WTO framework if the emphasis in exports requires some kind of subsidies. C) export growth may not add to GDP if it crowds out growth in output of goods for domestic consumption. D) export promotion by many countries may lead to economic conflicts. E) current research has clearly established that there is no causal connection between exports and faster economic growth.
Investors considering switching capital assets may also consider the potential tax liability and decide not to switch. This is known as bracket creep.
A. True B. False C. Uncertain
Capital is a good used in the production of goods that households consume
Indicate whether the statement is true or false