In which of the following cases would real income rise?
A. Nominal income rises by 8 percent and the price level rises by 10 percent.
B. Nominal income rises by 2 percent and the price level remains unchanged.
C. Nominal income falls by 4 percent and the price level falls by 2 percent.
D. Real income will rise in all of these cases.
B. Nominal income rises by 2 percent and the price level remains unchanged
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The quantity demanded of a good reflects
A) the number of units of a good people actually purchase. B) the number of units of a good suppliers will provide. C) the number of units of a good people plan to purchase at different prices. D) the number of units of a good people need to purchase.
Severe fiscal imbalances can directly trigger a currency crisis since
A) investors fear that the government may not be able to pay back the debt and so begin to sell domestic currency. B) the government may stop printing money. C) the government may have to cut back on spending. D) the currency must surely increase in value.
The problem of moral hazard exists when:
A. a bank is solvent but many of its assets are illiquid. B. agencies like the Fed act based on politics rather than sound economics. C. the failure of one financial institution can lead to the failure of other institutions. D. people or institutions, who are insured, tend to take on too much risk.
The price of labor in the poultry industry has just increased. For poultry, this will lead to
A. a decrease in price and a decrease in quantity. B. an increase in price and an increase in quantity. C. a decrease in price and an increase in quantity. D. an increase in price and a decrease in quantity.