Suppose that in 2016, all prices in the economy double and that all wages and salaries also double. In 2016 you
A) are no better off or worse off than you were in 2015 as the purchasing power of your salary has remained the same.
B) are worse off than you were in 2015 as you can no longer afford to buy as many goods and services.
C) are better off than you were in 2015 as your salary is higher than it was in 2015 and you can now buy more goods and services.
D) cannot determine whether you are better off or worse off than you were in 2015, because the purchasing power of your salary cannot be determined.
A
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In the short run, when the central bank increases the quantity of money, what happens to real balances?
a. They do not change, since prices will rise by the same proportion. b. They will fall, since prices will rise by a greater proportion. c. They will rise, since prices overall will fall. d. They will rise, since prices will not change in the short run.
The sole owner of a unincorporated business unable to pay its debts:
a. may be sued by the people to whom the business owes money b. may be forced to pay them out of his own bank account c. may be forced to sell his personal property to pay those debts d. all of these are correct