Suppose that Colleen's nominal wage rate was $20 per hour in 1998, the base year for the CPI. If the CPI in 2003 was 120.0 and her nominal wage had risen to $22 per hour, what was her real wage in 2003?

A speculator who believes strongly that interest rates will rise would be likely to

A) buy futures contracts on Treasury bills. B) sell futures contracts on Treasury bills. C) buy Treasury bonds in the spot market. D) increase now the amount of money which he lends.

Congress is debating whether to raise taxes by $100 billion or decrease spending by $100 billion in order to eliminate a budget deficit. Which action will have the larger effect on equilibrium GDP?

a. the increase in taxes b. the decrease in spending c. the effects will be equal d. not possible to determine without knowing the multiplier