Recently a teachers' union argued that the standard of living of teachers working for the school district was falling. The negotiating team for the school board replied that this was not true because the teachers had received significant increases in nominal income through collective bargaining. Could the union statement be correct?
A. No, because real income may rise if price increases are proportionately greater than the
increases in nominal income
B. Yes, because real income may fall if price increases are proportionately smaller than the
increases in nominal income
C. Yes, because real income may fall if price increases are proportionately greater than the increases in nominal income
D. No, because real income may rise if price increases are proportionately greater than
declines in nominal income
C. Yes, because real income may fall if price increases are proportionately greater than the increases in nominal income
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Toothpicks are sold in a perfectly competitive market. The market price is currently $3 per box of one hundred toothpicks
At its current level of production, a representative firm in the toothpick industry is producing at a level of output such that long-run average cost is $3.25 per box of one hundred toothpicks. Given this information, is the toothpick industry in equilibrium? Explain.
According to purchasing power parity, the relationship among the domestic price (P), the foreign price (P ), and the nominal exchange rate (e), can be written as
A) P = e - P . B) P = P - e. C) P = eP . D) P = e/P .