In order to reduce labor supply, a union must be able to

Real wages will rise if

A) money supply growth is less than expectations. B) real interest rates fall. C) aggregate demand is less than aggregate supply. D) money supply growth exceeds the inflation rate.

Suppose an exhaustible resource can be sold only this period or in the next period. The marginal cost of extraction is constant and equal to $2. The current and next year prices of the resource are $12 and $13, respectively. At what interest rate the owner of the resource will be indifferent between selling it today or in the next period?

A) 5% B) 7.5% C) 10% D) 12.5%