The Hatfields and the McCoys Both Earn $50,000 Per Year

question 49

Multiple Choice

The Hatfields and the McCoys both earn $50,000 per year in real terms in the labor market, and both families are able to earn a 25% real interest rate on their savings. In the year 2000, both families began to save. The Hatfields saved 8% of their income each year; the McCoys saved 10%. In 2000, the Hatfields consumed ______ more than the McCoys; in 2001, the Hatfields consumed ______ than the McCoys.

• A) $1,000; $25 more
• B) $2,000; $25 more
• C) $1,000; $25 less
• D) $2,000; $25 less

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Definitions:

Virtual Monopolies

Situations where a single company or entity dominates an entire market or industry, even though technically there may be minor competitors.

Essential Resource

A fundamental input required for the production of goods and services, often characterized by its scarcity and necessity.

International Nickel Company

A multinational corporation that was historically involved in nickel mining and smelting; now part of Vale S.A.

DeBeers Diamond Company

A large multinational corporation that specializes in diamond exploration, diamond mining, diamond retail, diamond trading and industrial diamond manufacturing sectors.