If the Nominal Wage Is €10 Per Hour and the Expected

question 40

Multiple Choice

If the nominal wage is €10 per hour and the expected price level is 2 and the actual price level is 4, then actual real wage rate is:

• A)€10.
• B)€2.50.
• C)€2.
• D)none of the above.

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Definitions:

APC

Average Propensity to Consume, which measures the fraction of income that households spend on consumption rather than saving.

MPS

Stands for Marginal Propensity to Save, which is the ratio of the change in savings to the change in disposable income. It indicates how much of an additional income unit is saved rather than spent.

Capacity Utilization Rate

The percentage of an industry or economy's total potential output that is actually being realized at a given time.

Great Recession

A significant global economic downturn that took place approximately from 2007 to 2009, deeply affecting the world economy.