Suppose that Julia receives a $20 gift card for the local coffee shop, where she only buys lattes and muffins. If the price of a latte is $4 and the price of a muffin is $2, then we can conclude that Julia:
A. should only buy muffins.
B. should only buy lattes.
C. can buy 5 lattes or 10 muffins if she chooses to buy only one of the two goods.
D. can buy 5 lattes and 10 muffins with her $20 gift card.
Answer: C
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During the expansion phase of the business cycle, business firms become optimistic about their future earning capacity as do banks. Nominal interest rates rise during expansions. Investment lending could be expected to
A) rise if the change in future earnings is thought to be greater than the change in interest rates. B) stay the same. C) fall. D) fall if the change in future earnings is thought to be greater than the change in interest rates.
If w is the growth rate of the nominal wage rate, p is the inflation rate as measured by the price deflator for total GDP, y is the growth rate for total domestic product, and n is the growth rate of labor, then the growth of real wage is ________
A) wp/n B) y - p C) w - p D) wn/p