If nominal wage rates increase by 5 percent per year and the price level increases by 3 percent per year, which of the following is correct?
a. Real wages will increase by 2 percent per year.
b. Real wages will increase by 3 percent per year.
c. Real wages will decrease by 3 percent per year.
d. Real wages will decrease by 2 percent per year.
e. Real wages will remain constant.
QUESTION 2Which of the following forms of money will earn at least some interest income?
a. Gold coins
b. Currency notes
c. Traveler's checks
d. Checkable deposits
e. Gift checks
QUESTION 3Suppose Jack's salary increased from 100,000 to 200,000 per year between 2004 and 2014 and the price index increased from 100 to 300 during the same period. Which of the following statements best describes Jack's situation?
a. His real income and money income have both increased.
b. His real income has increased and money income has decreased.
c. His real income and money income have both decreased.
d. His real income has decreased and money income has increased.
e. His real income has remained unchanged.
QUESTION 4Which of these is an advantage of money as a store of value?
a. It can generate high interest income.
b. It can facilitate hassle-free international exchange.
c. It can be easily liquidated.
d. It can signal a nation's economic health.
e. It can increase potential output.
QUESTION 5In a particular year, if the price level rises by 4 percent and the nominal wage of workers rises by 6 percent, we can conclude that the real wage has:
a. fallen by 2 percent.
b. fallen by 10 percent.
c. increased by 2 percent.
d. increased by 10 percent.
e. remained constant.
QUESTION 6The demand for money is based primarily on money's role as a(n):
a. measure of wealth.
b. medium of exchange.
c. standard of economic well-being.
d. interest-bearing asset.
e. non-interest-bearing asset.
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