Crystal is a construction worker who spends all her money on novels and beignets

Question

Crystal is a construction worker who spends all her money on novels and beignets. In 2010 she earned $20 per hour, the price of a novel was $10, and the price of a beignet was $2. Suppose that the Fed sharply increases the money supply between 2010 and 2015. In 2015, Crystal's wage has risen to $40 per hour. The price of a novel is $20 and the price of a beignet is $4. In 2015, the relative price of a novel is ________($4, 0.2 novels, $20, or 5 beignets). Between 2010 and 2015, the nominal value of Crystal's wage _______(decreases, remains the same, or increases) and the real value of her wage _____(decreases, remains the same, or increases).

Explanation / Answer

a) 5 beignets b)increases c)remains the same

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