If the inflation rate is 2.5 percent and the nominal interest rate is 10 percent, then the real interest rate is
A) 2.5 percent. B) 7.5 percent. C) -2.5 percent. D) -7.5 percent. E) 12.5 percent.
B
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The figure above shows the market for college education. The efficient quantity of education is
A) 0 students. B) 4 million students. C) 6 million students. D) more than 6 million students. E) more than 4 million students and less than 6 million students.
The local labor market for lawn-mowing workers is initially in equilibrium. These workers are also able to clean swimming pools and have no preference for one job over the other. If the wage rate for pool cleaning rises, which of the following would occur in the lawn-mowing labor market?
a. Both labor demand and labor supply will drop, leading to a lower wage rate and lower employment. b. Both labor demand and labor supply will rise, leading to a higher wage rate and lower employment. c. Labor supply will drop, leading to a higher wage rate and lower employment. d. Labor supply will drop, leading to a lower wage rate and lower employment. e. Labor demand will drop, leading to a lower wage rate and lower employment.