(Table 1: Econia's Consumer Price Index and Salary Data, 2008

question 16

Multiple Choice

(Table 1: Econia's Consumer Price Index and Salary Data, 2008 and 2018) Table 1 provides data on Econia's Consumer Price Index (CPI) and average salaries for two years. Junko says that Econia's workers are twice as prosperous as they were before, but Marko disagrees. Who is suffering from the money illusion and why? $\begin{array}{c}\text { Table 2: Income and Consumer Price Index Data for Four Cities, } 2008 \text { and } 2018\\\begin{array}{|c|c|c|c|c|}\hline \quad \quad \quad & \text { City A } \quad \quad \quad & \text { City B } \quad \quad \quad & \text { City C } \quad \quad \quad & \text { City D } \quad \quad \\\hline \begin{array}{c}2008 \text { average } \\\text { income }\end{array} & \$ 40,000 & \$ 70,000 & \$ 85,000 & \$ 100,000 \\\hline 2008 \text { CPI } & 120 & 130 & 90 & 100 \\\hline \begin{array}{c}2018 \text { average } \\\text { income }\end{array} & \$ 65,000 & \$ 100,000 & \$ 160,000 & \$ 160,000 \\\hline 2018 \text { CPI } & 150 & 150 & 160 & 170 \\\hline\end{array}\end{array}$

• A) Junko is suffering from the money illusion because she is considering only nominal values and not real values.
• B) Junko is suffering from the money illusion because she should focus only on the CPI and not on salaries to make the determination.
• C) Marko is suffering from the money illusion because he is focused only on the CPI and not on salaries.
• D) Marko is suffering from the money illusion because he is considering real values rather than nominal values.

Understand the concept of comparative advantage and how it affects trade decisions.

Analyze the effects of trade on producer and consumer surplus.

Recognize the role of tariffs and their impact on trade.

Identify how international trade affects the economic well-being of a country.

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Definitions:

Mathematical Calculations

The process of using mathematical symbols and methods to perform quantifiable measurements and solve numerical problems.

Logical Comparisons

The process of evaluating two or more variables by applying logical operators to determine a true or false outcome.

Moore

Refers to Moore's Law, an observation that the number of transistors on a microchip doubles approximately every two years, though the cost of computers is halved.

Microprocessor Complexity

Refers to the intricacy and sophistication of a microprocessor's design, often measured by the number of transistors and processing capabilities.