When converting nominal values to real values, we divide by the __________ index.

A labor contract provides for a first-year wage of $10 per hour, and specifies that the real wage will rise by 3 percent in the second year of the contract. The CPI is 1.00 in the first year and 1.07 in the second year. What dollar wage must be paid in the second year?

A. $11.02 B. $10.70 C. $10.90 D. $10.30

Suppose that a country with a closed economy opens itself to international trade and becomes a net exporter. In that case, domestic suppliers will supply ________ of that good after it opens itself to international trade.

A. less B. same amount C. none D. more