If the cost of living is higher in richer cities than in poorer cities, and the nominal minimum wage is the same in every city, then the real purchasing power of the minimum wage would necessarily be
A. independent of the cost of living in any city.
B. higher in the poorer cities.
C. higher in the richer cities.
D. lower in the poorer cities.
Answer: B
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Last year, the price of heating oil was $4 per gallon, and Jonetta purchased 100 gallons of heating oil. This year, the price of heating oil falls to $3 per gallon while Jonetta's income is unchanged. Jonetta decides to share her good fortune by giving her retired father a gift of $100. Consider an indifference curve-budget line diagram with heating oil on the horizontal axis and "all other goods" on the vertical axis.
(i) Does the price change make Jonetta's budget line flatter or steeper? Justify your choice. (ii) After Jonetta gives the $100 gift, will her new budget line lie above, lie below, or pass through her initial optimum? Justify your choice. (iii) Sketch an indifference curve-budget line diagram that illustrates this situation. This year, will Jonetta be better or worse off than she was last year?
Which of the following is graphed as a horizontal line across levels of real GDP in the aggregate expenditures model?
A. The saving schedule B. The investment schedule C. The consumption schedule D. The investment demand curve
If the exchange rate rises, the quantity of dollars demanded
A) increases and there is movement down along the demand curve for dollars. B) decreases and there is movement down along the demand curve for dollars. C) decreases and there is movement up along the demand curve for dollars. D) increases and there is movement up along the demand curve for dollars. E) does not change.
When the government cuts the income tax rate, the supply of labor ________, the demand for labor ________, and the equilibrium level of employment ________
A) increases; increases; increases B) increases; decreases; increases C) increases; does not change; increases D) decreases; increases; increases E) increases; does not change; decreases