Refer to the diagram. Assume that nominal wages initially are set on the basis of the price level P 2 and that the economy initially is operating at its full-employment level of output Q f . In the short run, cost-push inflation could best be shown as:
A. a leftward shift of aggregate supply from AS 2 to AS 3 .
B. a move from b to c on AS 2 .
C. a move from b to c to d.
D. a move from b to f to d.
A. a leftward shift of aggregate supply from AS 2 to AS 3 .
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Suppose $1 will buy 150 yen in January and 200 yen the following December. This change could have occurred if the
A) demand curve for dollars shifted rightward. B) demand curve for dollars shifted leftward. C) supply curve of dollars shifted rightward. D) demand curve for yen shifted rightward.
Fifteen years ago your parents purchased some land with the idea of selling it later to help pay your college expenses. They purchased the land for $100,000 . They sold if for $180,000 . During the time they held it the price level rose from 80 to 120 . If your parents face a 25% tax rate, what was their real after-tax gain? (Hint: What's the real value of the land in current prices?)