Gretchen expects the price level to rise from 104 this year to 108 next year, and she is able to incorporate these expectations into her wage contract. If the price level rises to 106 next year instead of 108, which of the following will occur?
A) Gretchen's real wage may rise or fall, depending on the unemployment rate.
B) Gretchen's real wage will rise.
C) Gretchen's real wage will fall.
D) Gretchen's real wage will be unchanged.
B
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Minimax Motors, a car manufacturer, spent $300 million on the establishment of a new plant that includes 25 assembly lines. The new plant has 470 employees that work 5 days a week to produce 1,200 cars per week. If Minimax Motors wants to increase its output to 1,400 cars per week immediately, it should: a. increase the number of assembly lines in its plant
b. increase the number of workers in the plant. c. increase the number of workers as well as the number of assembly lines in the plant. d. open a new plant with more assembly lines and workers.
Assume, for Mexico, that the domestic price of oranges without international trade is lower than the world price of oranges. This suggests that, in the production of oranges,
a. Mexico has a comparative advantage over other countries and Mexico will export oranges. b. Mexico has a comparative advantage over other countries and Mexico will import oranges. c. other countries have a comparative advantage over Mexico and Mexico will export oranges. d. other countries have a comparative advantage over Mexico and Mexico will import oranges.