In year 1 the CPI is 140, and in year 2 the CPI is 160. From year 1 to year 2, Chiang's salary rises from $42,000 to $49,000, and Marta's salary rises from $55,000 to $60,000. Who is "more than keeping up with inflation"?

Which of the following is an important assumption in the short-run macro model?

a. Government spending depends on income. b. Output does not change. c. Firms do not maintain inventories. d. Investment depends on income. e. Prices do not change.

In the circular flow model, firms use the money they earn from selling their goods and services to pay for the

a. goods and services they buy on the product market b. resources they buy on the product market c. goods and services they buy on the resource market d. resources they buy on the resource market e. differences between the revenue they earn selling the goods and services and the costs involved in producing them