If workers and firms expect that inflation will be 3 percent next year, and real wages are not changing over time, by how much will nominal wages increase?

The average price of gasoline in your neighborhood is $2.15 per gallon

Your neighbor, Diana tells you that you can "save a lot" by frequenting a gas station 20 miles outside your neighborhood where the price of gasoline is $2.06 per gallon However, she cautions you that there are usually long lines at that station. Is her suggestion beneficial to you? A) No, my friend is misled; clearly, the lower-priced gasoline must be of inferior quality and could damage vehicles. B) No, if one factors in the non-monetary opportunity costs (driving time and waiting in line), it could prove more costly to go to the lower-priced gasoline station. C) Yes, the lower price of gasoline at the rival station increases my purchasing power and enables me to consume more of other goods. D) Yes, since gasoline is a necessity for car owners, the total cost savings would be relatively substantial.

Which of the following statements is true?

A) Countries tend to trade extensively with their neighbors. B) The United States is an important trading partner for many countries. C) The largest amount of international trade occurs between industrialized countries. D) All of the above are true.