Suppose you received a 5 percent increase in your nominal wage. Over the year, inflation ran about 2 percent. Which of the following is true?
A. Your real wage increased.
B. Your nominal wage decreased.
C. Both your nominal and real wages decreased.
D. Although your nominal wage rose, your real wage decreased.
Answer: A
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When the U.S. interest rate rises, the demand for U.S. dollars ________ and the exchange rate ________
A) increases; falls B) does not change; rises C) increases; rises D) decreases; falls E) decreases; rises
Idiosyncratic risk:
A. can not be eliminated through diversification. B. is unique to a particular company or asset. C. is not generally absent from index funds. D. All of these are true.
Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is
a. 0. b. 1. c. 6. d. 36.
In cost-benefit analysis, regulatory intervention can be justified if the
A. Value of government failure exceeds the value of market failure. B. Marginal benefit of regulation exceeds its marginal cost. C. Economic cost of regulation exceeds the value of the improvements in government intervention. D. Intervention improves market outcomes, regardless of costs.