Suppose that your income during Year X was $50,000, and the CPI for Year X was 150 (base year = Z=100). Back in Year Z your income was $30,000. Has your real income increased or decreased from Z to year X? By how much?
A. Increased by $5,000.
B. Increased by $3,333.
C. Decreased by $5,000.
D. Decreased by $3,333.
Answer: B
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In each of the following situations, list what will happen to the equilibrium price and the equilibrium quantity for a particular product, which is a normal good
a. The price of inputs decrease b. The price of a complement increases c. The number of producers in the market increases d. Income increases e. The price of a substitute in production increases
In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it can still benefit by trading with the other country
Indicate whether the statement is true or false
A perfectly elastic demand curve for a firm
a. is represented by a vertical line. b. means that with every unit price increase there will be a unit decrease in demand. c. is formulated by P × Q = a constant, for all prices and quantities. d. indicates that any increase in price will eliminate all purchases of its product.
A permanent reduction in inflation would
a. permanently reduce menu costs and permanently lower unemployment. b. permanently reduce menu costs and temporarily raise unemployment. c. temporarily reduce menu costs and temporarily lower unemployment. d. temporarily reduce menu costs and temporarily raise unemployment.