Suppose that you open your own business and earn an accounting profit of $35,000 per year. When you started your business, you left a job that paid you a $30,000 salary annually
Also, suppose that you invested $70,000 of your own funds to start up your business. If the normal rate of return on capital is 10 percent, your economic profit is A) $5,000.
B) -$5,000.
C) $2,000.
D) -$2,000.
D
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If inflationary expectations are increasing, we would expect that the nominal interest rate would also be increasing, holding all else constant
Indicate whether the statement is true or false
Functional divisions
a. Make it easier to tie pay to performance b. Make it more difficult to tie pay to performance c. Break all ties between pay and performance d. None of the above
Suppose that the cost of living is 25 percent higher in Chicago than in Indianapolis. If wages in Chicago are 10 percent higher on average than wages in Indianapolis, then eventually the labor supply will
a. fall in Indianapolis, increasing the average wage there b. fall in Chicago, increasing the average wage there c. rise in Indianapolis, increasing the average wage there d. rise in Chicago, decreasing the average wage there e. fall in Indianapolis, decreasing the average wage there
Which of the following measures the growth rate of an economy?
A. Real GDP divided by nominal GDP. B. GDP per worker. C. Investment as a percentage of GDP. D. The percentage change in real GDP from one period to another.