If prices (as measured by the CPI) tripled and nominal wages tripled, what would happen to real wages?
a. They would triple.
b. They would remain unchanged.
c. They would increase by one-third.
d. They would decrease by one-third.
e. They would increase by a factor of nine.
B
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In the figure above, if the interest rate is 8 percent, people demand $0.1 trillion
A) less money than the quantity supplied and the interest rate will rise. B) less money than the quantity supplied and the interest rate will fall. C) more money than the quantity supplied and the interest rate will fall. D) more money than the quantity supplied and the interest rate will rise.
The circular flow model ignores a host of major economic institutions and activities. Focusing on only one basic fact about how the economy works is the model's
a. way of getting around the ceteris paribus assumption b. disadvantage because it distorts reality c. flaw because there is no one single fact about an economy d. strength in providing some understanding about how the economy works e. effectiveness in creating policy recommendations