The value of money for buying goods and services is known as
A. purchasing power.
B. nominal income.
C. nomination.
D. inflation.
Answer: A
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Which of the following statements best describes the substitution bias in the construction of the CPI?
A. Not taking into account that consumers alter their buying habits as new products come into being and lifestyles change, for example, the rising popularity of cell phones instead of land-line phones. B. Not accounting for the fact that consumers are effectively getting more product for their money because technological changes have led to improvements in quality and lower production costs over time. C. The failure to recognize that over time consumers alter the goods they buy, switching from relatively high priced goods toward lower-priced alternatives. D. The failure to capture the fact that consumers have made substitutions in their shopping habits: shifting from high-priced department stores to lower-priced discount stores.
For the cost function C(Q) = 100 + 2Q + 3Q2, the marginal cost of producing 2 units of output is:
A. 3. B. 14. C. 2. D. 12.
Workers in the textile industry are laid off during a recession because they are unwilling to accept a wage cut, unless they know that workers in other industries are receiving similar cuts. This example is consistent with the
A. social contract explanation of unemployment. B. relative-wage explanation of unemployment. C. explicit contract explanation of unemployment. D. efficiency wage explanation of unemployment.
A person is preparing for a long automobile trip and cashes in a certificate of deposit for cash in case of emergencies along the way. This is an example of the
A) transactions demand for money. B) asset demand for money. C) precautionary demand for money. D) wealth demand for money.