Explain why an increase in a person in debt who experiences a wage increase that is exactly equal to the inflation rate may make him or her better off.
What will be an ideal response?
If prices and wages increase at the same rate, a person may end up being able to afford exactly what they could buy before the price increase. However, a person in debt will see their nominal wages increase but have their debt (measured also in nominal terms) not change. This will make it easier for the debtor to pay their debts off when they experience inflation.
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Which statement is false?
A. Before the Civil War about three quarters of the farms of over 500 acres were located in the South. B. The great abundance of land was the most influential factor in the United States' economic development during the 19th century. C. Although the percentage of Americans living on farms has declined substantially over the last 70 years, the actual number of people living on farms has remained constant. D. None of the statements are false.
In the 2000s, government budget deficits became larger as a percent of GDP
a. True b. False
Suppose the distribution of innate ability is distributed symmetrically throughout a population but that the wage distribution is positively skewed. What most likely explains this?
A. a decreasing Gini coefficient. B. a noncompetitive labor market C. differences in human capital accumulation. D. decreased immigration. E. a regressive tax code.
Which of the following transactions would not be included in the current account of the home country?
A. A foreign student pays tuition to a university in the home country. B. A consumer good is imported into the home country. C. A home country resident receives income on his or her foreign assets. D. A home country resident makes a deposit in a foreign bank.