2. Which of the following statements is (are) correct?
(x) Suppose that the CPI was 200 in 2006 and was 160 in 1996. Then
according to the CPI, $100 in 2006 purchased the same amount of
goods and services as $80 in 1996.
(y) A worker received $5 for a daily wage in 1930. If the CPI was
17.4 in 1930 and is 215.6 today then the value of that 1930 wage in
today’s dollars is more than $68.25 but less than $69.75.
(z) A business firm has an agreement with its workers to index
completely the wage of its employees using the CPI. The company
currently pays its production line workers $12.00 an hour and is
scheduled to index their wages today. If the CPI is currently 180
and was 160 a year ago, the firm should increase the hourly wages
of its workers by $1.50.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (z) only
3. Which of the following statements is (are) correct?
(x) You know that a candy bar costs $0.75 today. You also know the
CPI for 1962 and the CPI for today. You would use [$0.75 x (1962
CPI / today's CPI) to compute the price of the candy bar in 1962
prices.
(y) George is a service manager at a car dealership. In year 2000,
he earned a salary of $38,500. Suppose the CPI is 168.1 in year
2000 and 204.6 in 2010. If George does not want to experience a
reduction in his real income for that ten-year period then his
nominal income in 2010 must be at least $46,860.
(z) Marvin is offered a job in Raleigh, North Carolina where the
CPI is 120 and a job in New York where the CPI is 150. His job
offer in Raleigh is for $54,000. The New York job needs to pay
$67,500 in order to make the two salaries have approximately the
same purchasing power.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only
(2) (C)
Purchasing power of $80 in 1996, in year 2006 = $80 x (200/160) = $100 [x is right]
Value of 1930 wage in today's dollars = $5 x (215.6/17.4) = $61.95 [y is wrong]
Current wage = $12 x (180/160) = $13.5 [Increase = $13.5 - $12 = $1.5] [z is right]
(3) (A)
Price in year N prices = Current price x (CPI in year N / Current year CPI) [x is right]
Income in 2010 = $38,500 x (204.6/168.1) = $46,860 [y is right]
Minimum salary in New York = $54,000 x (150/120) = $67,500 [z is right]
2. Which of the following statements is (are) correct? (x) Suppose that the CPI was 200...
1. Which of the following statements about the labor market is (are) correct? (x) The supply curve reflects job seekers and the demand curve reflects the jobs that are available. (y) Workers determine the demand for labor, and firms determine the supply of labor. (z) The minimum wage is an example of a price floor because the government has mandated a minimum price of labor. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only...
Which of the following statements is (are) correct? (x)Minimum wage laws that raise the raise the minimum wage above the equilibrium wage in the unskilled labor market contribute to the natural rate of unemployment. (y)Minimum wages create unemployment in markets where they create a surplusof labor. Unemployment of this type is called structural. (z)If some wages are forced above the equilibrium level and they are not able to return to equilibrium, then the economy experiences an increase in structural unemployment...
2. Which of the following statements is (are) correct? (x) Each adult included in the employment and unemployment statistics is classified as unemployed, employed, or not in the labor force. (y) In addition to the unemployment rate, the Bureau of Labor Statistics (BLS) produces other data on the adult population such as types of employment and length of the average workweek. (z) The Bureau of Labor Statistics (BLS) uses data collected from those applying for unemployment insurance to compute the...
Which of the following statements is (are) correct? (x) If the average income of an American is higher than the average income of a Canadian, it is most likely because productivity is higher in Canada than in the United States. (y) To improve living standards, policymakers should reduce spending on public education. (z) In general, government policies that lead to an increase in productivity will elevate the average income of the residents of that country A. (x), (y) and (z)...
According to the textbook, which of the following statements is (are) correct? (x) If real GDP is higher in one country than in another, it is not necessarily true that the standard of living is higher in the country with the higher real GDP. (y) Real GDP per person is not a perfect measure of the well-being of individuals in society because it excludes things like leisure time, the value of goods produced at home, and environmental quality. (z) Poor...
13. Which of the following statements is (are) correct? (x) The natural rate of unemployment is the amount of the unemployment that the economy normally experiences. (y) Cyclical unemployment refers to the year-to-year fluctuations of unemployment around its natural rate that are due to short-run ups and downs of the economy (z) Suppose the natural rate of unemployment is 5.5 percent and the current rate of unemployment is 8.1 percent. The cyclical unemployment rate is a positive value of 2.6...
5. According to the textbook, which of the following statements is (are) correct? (x) From 1960 to about 1975 in the United States, net capital outflow was small and sometimes negative and sometimes positive. (y) Most of the change from 1991 to 2000 in U.S. net capital outflow as a percent of GDP was due to a decrease in U.S. investment (z) In the U.S. from 2000 to 2006, net capital outflow as a percent of GDP became a larger...
5. , which of the following statements is (are) correct? (x) Transactions involving items produced in the past are included in current GDP because GDP measures the value of goods and services sold in the current year. (y) Robert, a United States citizen, works only in Mexico. The value added to production from his employment is included in the GDP of the United States, but not Mexican GDP. (z) GDP excludes items produced and sold illegally and items that are...
8. , which of the following statements is (are) correct? (x) The marginal cost of the fifth unit equals the variable cost of five units minus the variable cost of four units (y) The variable cost of 50 units equals the average variable cost of 50 units times 50. (z) If marginal cost is rising, then average variable cost is rising if marginal cost exceeds average variable cost. A. (x), (y) and (z) B. (x) and (y) only C. (x)...
Which of the following statements is (are) correct? (x) Since the market for wheat is considered to be competitive, a wheat farmer maximizes profit by choosing a quantity at which the market price of wheat is greater than the farm's marginal cost of production. (y) If rational, profit-maximizing firms analyze at the margin, then marginal adjustments to production should increase profit (decrease loss) if the firm is not at its profit-maximizing amount of output. (z) When price is less than...