Question

Maria spends all of her money on paperback novels and beignets. In 2011 she earned $27.00 per hour, the price of a paperback novel was $9.00, and the price of a beignet was $3.00.
1. Which of the following give the nominal value of a variable?
Check all that apply.
O The price of a beignet is $3.00 in 2011.
O Maria's wage is $27.00 per hour in 2011.
O The price of a beignet is 0.33 paperback novels in 2011.
2. Which of the following give the real value of a variable?
Check all that apply.
O The price of a paperback novel is 3 beignets in 2011.
O Maria's wage is 9 beignets per hour in 2011.
O The price of a paperback novel is $9.00 in 2011.
3. Suppose that the Fed sharply increases the money supply between 2011 and 2016. In 2016, Maria's wage has risen to $54.00 per hour. The price of a paperback novel is $18.00 and the price of a beignet is $6.00. In 2016, the relative price of a paperback novel is ______(6$, 18$, 3 Beignets, .33 Beignets)________.
4. Between 2011 and 2016, the nominal value of Maria's wage ______ (increases/decreases/remains the same)____ and the real value of her wage______ (increases/decreases/reamins the same)_______.

Answer 1

Answer:

1.  The price of a beignet is $3.00 in 2011 and Maria's wage is $27.00 per hour in 2011.

2. The price of a paperback novel is 3 beignets in 2011 and Maria's wage is 9 beignets per hour in 2011.

3. 3 Beignets

4. increases and remains the same

Explanation:

1.  Nominal value is the value of a product based on the money of the day that we see. The price of a beignet is $3.00 in 2011 and Maria's wage is $27.00 per hour in 2011 are the values of the product and wage quoting the money of the day.

2. The real value of a varaible is the value in terms of the value of some other goods. In this case Paperback and Maria's wage are valued in terms of beignets.

3. The relative price of paperback is valued in terms of beignets. So if a beignet costs $6 and a paperback novel is $18. The relative price of a paperback novel will be three times the cost of beignet, since a beignet costs $6.

4. Between 2011 and 2016, the nominal value of Maria's wage increases and the real value of her wage remains the same.