Your grandfather tells you that he earned $.50 per hour at his job when he was a boy in 1929
a. Given that the CPI was 17.1 in 1929 and 184.0 in 2003, how much would you have to make in 2003 to have the same real hourly wage?
b. You made $5.50 an hour working during 2003 . Were you better off than your grandfather in terms of purchasing power? Explain.
c. Your grandfather also tells you that a soda cost $.05 in 1929, and you know a soda cost $.55 in 2003 . You decide to use the price of a soda as the price index. How much would the 2003 "soda equivalent" of $.50 per hour in 1929 be?
a. $5.38
b. Yes, $5.50 had more purchasing power than $.50 did in 1929.
c. $5.50 in 2003 would buy the same number of sodas (10) that $.50 would have in 1929.
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A problem with using fiscal policy to fine-tune the economy is that
A) agreeing on the appropriate fiscal policy is time consuming. B) fiscal policy impacts the economy too fast. C) fiscal policy impacts only urban areas of the nation. D) fiscal policy impacts only the largest states in the nation.
To internalize a negative externality: a. a producer's costs could be reduced by an amount equal to the external cost resulting from the production of a good. b. a producer's costs could be increased by an amount equal to the external cost resulting from the production of a good. c. a producer could receive a subsidy equal to the external cost resulting from the production of a good
d. None of the above are correct.