Mr. Pierpont has wealth of $200,000. He wants to keep at least $80,000 in bonds at all times, and will shift $10,000 into bonds from his checking account for each percentage point that the interest rate on bonds exceeds the interest rate on his
checking account. If the interest rate on checking accounts is 4% and the interest rate on bonds is 9%, how much does Mr. Pierpont keep in his checking account? A) $50,000
B) $70,000
C) $130,000
D) $150,000
B
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Refer to the diagram and assumptions. If a union is formed in sector 1 and the union increases the wage rate from W n to W u , then employment will:
These two graphs show two sectors of the labor market for a particular kind of
labor. Relevant product markets are competitive. The two labor demand curves are identical and initially the quantities of labor employed in the two sectors are L 1 and L 1 and the wage rate in each sector is W n
A. decrease, but we cannot determine by how much.
B. decrease by 0L 2 in sector 1.
C. decrease by L 1 L 2 in sector 1.
D. increase by L 1 L 2 in sector 1.
Explain why inflation is a way for governments to default on a portion of the debts they owe.
What will be an ideal response?