Question : 91.Suppose that at the start of this year you got : 1232907

 

91.Suppose that at the start of this year you got a salary increase of 10 percent from your employer. The prices of the goods and services you typically purchase increase 10 percent during the year. At the end of the year you have experienced on balance:   

A. Higher real income and higher nominal income.

B. Higher real income but lower nominal income.

C. No change in nominal income.

D. No change in real income.

92.Which of the following is an example of the price effect during a period of inflation?   

A. Your income increases, but not as rapidly as the price level does.

B. You buy a lot of gasoline, and the price of gasoline rises more rapidly than the price level does.

C. You own a house, and its value rises more rapidly than the price level does.

D. You own municipal bonds that pay a low interest rate while the price level is rising.

93.Suppose the cost of medical care rose 200 percent from 1990 to 2012, and average prices for the economy rose 150 percent. Relative to others, people who purchased medical care experienced a:   

A. Lower real income as a result of the price effect.

B. Higher real income as a result of the price effect.

C. Lower real income as a result of the wealth effect.

D. Higher real income as a result of the wealth effect.

94.Suppose the cost of milk rose 100 percent from 1990 to 2012, and average prices for the economy rose 133 percent. Relative to others, people who purchased milk experienced a:   

A. Lower real income as a result of the price effect.

B. Higher real income as a result of the price effect.

C. Lower real income as a result of the wealth effect.

D. Higher real income as a result of the income effect.

95.Which of the following is an example of the income effect during a period of inflation?   

A. You buy lots of peanut butter, which decreases in price while the price level rises

B. You own stock that increases in value more rapidly than the price level does

C. You own a house, and its value rises at the same rate as the price level does

D. Your income is fixed and does not increase even though the price level is rising

96.Generally speaking, which of the following groups would tend to gain real income from the wealth effects of inflation?   

A. People who purchase long-term bonds when interest rates are low

B. People who have passbook savings accounts

C. People who own assets that are appreciating faster than the inflation rate

D. People who hold all of their assets in the form of cash

97.Which of the following is an example of the wealth effect during a period of inflation?   

A. A firm receives a fixed price for the services it sells while the price level is rising

B. You hold money in a savings account that earns 5 percent interest while the price level doubles

C. Your income stays constant while the price level doubles

D. You pay for utilities that are becoming more expensive as the price level is rising

98.The value of an original painting, held as an asset, increased in value by 100 percent from 1970 to 2012. Suppose during the same period average prices in the economy rose by 150 percent. The owner of the painting, relative to those who do not own paintings, experienced a:   

A. Higher real income as a result of the wealth effect.

B. Higher real income as a result of the price effect.

C. Lower real wealth as a result of the wealth effect.

D. Lower real income as a result of the income effect.

99.The value of a piece of land, held as an asset, increased in value by 200 percent from 1985 to 2012. Suppose during the same period average prices in the economy rose by 165 percent. The owner of the land, relative to those who do not own land, experienced a:   

A. Higher real wealth as a result of the wealth effect.

B. Higher real income as a result of the price effect.

C. Lower real income as a result of the income effect.

D. Higher real income as a result of the income effect.

100.The uncertainty of inflation is likely to affect:   

A. Production and consumption decisions.

B. Production decisions but not consumption decisions.

C. Consumption decisions but not savings.

D. The elderly on fixed incomes but not current wage earners.

 

 

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