This table shows the price-level adjustment as compared to the United States. CountryPrice-Level AdjustmentAustralia-0.50China0.25Mexico0.34United States0.00According to the table shown, if Bob is earning $30,000 in the United States and Bill is earning $40,000 in Mexico, what can be said about their standards of living?
A. Bill is earning more in real terms than Bob.
B. Bob and Bill are earning the same amount in real terms.
C. Bob and Bill are earning the same amount in nominal terms.
D. Bob is earning more in real terms than Bill.
Answer: D
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Suppose that the average football player earns $1 million per year and that there are 500 players. The average school teacher earns $25,000 per year and there are 1 million teachers. From this we can say that
a. football players are paid too much. b. teachers are paid too little. c. the group of football players must be more valuable than teachers as a group. d. teachers as a group are more valuable than the group of football players.
If a tax cut increases people's labor supply, then the tax cut
A) increases potential GDP. B) decreases aggregate demand. C) decreases potential GDP because the real wage rate falls. D) does not affect aggregate demand. E) Both answers B and C are correct.
The theory that government borrowing may function like an increase in taxes is known as
A. the Ricardian equivalence theorem. B. Congressional Tax policy. C. the marginal propensity to consume. D. planned tax policy.
If the interest rate rises, you would expect the price of any stock to
A. rise. B. fall. C. be unaffected. D. fall to zero.