In 1931 the price of a movie ticket was $0.25 . The consumer price index was 15.2 in 1931, and 210 in 2008 . Using 2008 prices, the real price of a movie in 1931 was
a. $13.82.
b. $52.50.
c. $1.81.
d. $3.45.
d
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A sharp movement in exchange rates can most likely lead to dramatic changes in profits and losses for which of the following?
a. an international travel agency b. a provider of domestic services c. a local bank d. a microbrewery
Disposable income equals national income minus personal taxes
Indicate whether the statement is true or false
Consider borrowers and lenders who agree to loans with fixed nominal interest rates. If inflation is higher than what the borrowers and lenders expected, then who benefits from lower real interest rates?
A. Only the borrowers benefit. B. Only the lenders benefit. C. Both borrowers and lenders benefit. D. Neither borrowers nor lenders.
"Countries usually experience substantial net economic gains from joining trade blocs." Do you agree or disagree with this statement? Why? In your answer, include discussion of the roles of trade creation and trade diversion. Also include discussion of other gains or losses that can arise in a country that chooses to join a trade bloc.
What will be an ideal response?