If the nominal wage rises by 6 percent, and the price level falls by 2 percent, the real wage will:
A. be unaffected.
B. rise by 4 percent.
C. fall by 4 percent.
D. rise by 8 percent.
Answer: D
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The result of the balanced budget multiplier is that aggregate demand changes by the amount of the change in:
a. government spending. b. tax revenue. c. government spending plus tax revenue. d. government spending minus tax revenue.
Which of the following was an unintended consequence of the subsidies and mandated expansion in output of gasoline produced from corn-based ethanol?
a. higher food and grain prices. b. a reduction in the demand for battery powered automobiles because of the low prices of gasoline produced from ethanol. c. sharply lower prices for feed grains because of a reduction in the demand for corn. d. a substantial reduction in crude oil prices because of the low-cost production of gasoline from ethanol.