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Subject 107, April 2004, Question 23 (amended)

R

Rebecca.Thomas

Member
The following question is taken from the revision booklets for CT7, booklet 6.

"Which of the following statements about real variables in the economy is FALSE?
  • Real interest rates are negative if the rate of inflation exceeds the nominal rate of interest
  • If all else is constant, a rise in money wages is also a rise in real wages.
  • An increase in real income will lead to a reduced demand for real money balances.
  • None of the above.

The answer is listed as C, but surely this would mean that D is also false and hence there are two answers to the question (the same being true if either A or B were false). Of course this works the other way around, if D is the answer then one of A, B or C must also be the answer.

On the other hand, all statements could be true and there is no correct answer to the question.

Someone please correct me if I'm wrong - but C cannot be the single answer to the question!?
 
Well, "none of the above" isn't really a statement about real variables in the economy! I imagine they are referring to the first three statements.
 
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