What will tend to happen to wages if workers and employers foresee inflation?
A. Both parties will seek to reduce nominal wages, and therefore keep real wages the same.
B. Nominal wages will remain constant, but real wages will increase to avoid the effects of inflation.
C. Inflation erodes purchasing power of workers, and real wages are unchanged.
D. Nominal wages will increase by an amount that keeps real wages constant.
Answer: D
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Kate's Great Crete (KGC) is a local monopolist of ready-mix concrete. Its annual demand function is Q = 20,000 - 400P, where P is the price, in dollars, of a cubic yard of concrete and Q is the number of cubic yards sold per year. What is the difference between price and marginal revenue when KGC sells 5,000 cubic years of concrete per year?
A. $12.50 B. $25.00 C. $37.50 D. $50.00
Which of the following is correct?
a. People whose nominal incomes rise faster than the rate of inflation gain purchasing power. b. Real income equals nominal income divided by the CPI as a decimal. c. The percentage change in real income equals the percentage change in nominal income minus the percentage change in CPI. d. All of these.
Why can't a firm in a perfectly competitive industry charge a price above the market-clearing price?
a. Government-imposed price ceilings prevent prices from being raised b. Firms in a perfectly competitive industry face significant barriers to entry. c. Perfectly competitive firms are price searchers. d. Numerous competitors produce the same product and charge the market price.
If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market
a. True b. False Indicate whether the statement is true or false