Suppose the economy was initially in a long-run equilibrium. Then the world economy expands so that foreign incomes rise. U.S. aggregate demand ________ and eventually the money wage rate ________.
A) increases; rises
B) increases; falls
C) decreases; rises
D) decreases; falls
Question 2
The figure above gives your budget line for magazine and CDs per month. Given that your income equals 60 per month, what is your real income in terms of magazines?
A) 12 magazines
B) 6 magazines
C) 2 magazines
D) 60/month
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