Suppose inflation is expected to be 5 percent next year, and you and your employer agree to a 6 percent increase in your nominal, or monetary, wage. If inflation turns out to be 5%, what is your nominal wage increase?
Ans: 6 percent
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As an individual earns additional income, the marginal utility of income tends to
A. Decrease. B. Increase. C. Remain constant. D. Shift toward the origin.
A decrease in the dollar price of the English pound will make
What will be an ideal response?
When the price of a product falls, the income effect induces the consumer to purchase more of it while the substitution effect prompts her to buy less.
a. true b. false
In a perfectly competitive market, a(n) ________ occurs because ________
A) efficient outcome; total surplus is maximized B) deadweight loss; firms minimize average minimum cost C) efficient outcome; the fair rules condition is met D) deadweight loss; firms must be price takers E) deadweight loss; total surplus is minimized