Assume the price of beer is $4, the price of pizza is $10 and the consumer's income is $250. Which consumption bundle will NOT be the consumers choice?

When exchange rates are not determined in the market but are instead set by a country's central bank, we say that the country's exchange rate is

A) fixed. B) a real exchange rate. C) flexible. D) a nominal exchange rate.

Kim is paid $50,000 per year, and pays an annual income tax of 10 percent. Due to an inflation rate of 10 percent, her pay increases to $55,000, which puts her in a higher tax bracket where she must pay 20 percent. Which of the following can be said of Kim?

A. Inflation caused her to be taxed more heavily and decreased her purchasing power. B. Inflation caused her to be taxed more heavily and increased her purchasing power. C. Her raise reflects the inflation rate, and therefore her purchasing power is unchanged. D. Inflation caused her to be taxed more but didn’t change her purchasing power.