One of the reasons why wages are "sticky downward" is that union workers often operate under a multiyear contract with a company and make wage reductions difficult or impossible during the contract period
a. True
b. False
Indicate whether the statement is true or false
True
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Changes in which of the following shifts the aggregate supply curve?
i. the price level ii. the money wage rate iii. potential GDP A) i only B) ii only C) iii only D) ii and iii E) i, ii, and iii
Crowding out can occur when a government budget ________ raises the real interest rate and the equilibrium quantity of investment ________
A) surplus; increases B) deficit; increases C) surplus; decreases D) surplus; does not change E) deficit; decreases
If Britain allows the pound-DM (Deutsche Mark) exchange rate to float, and there is an increase in the foreign interest rate, it:
A) has no effect on home rates. B) will cause a monetary contraction and a higher interest rate in Britain. C) will eventually decrease if trade is affected. D) always shifts out the home IS curve (Britain), all else equal.
Since most consumers spend very little on salt, a small increase in the price of salt will:
A. reduce quantity demanded by a large amount. B. not change quantity demanded. C. not reduce quantity demanded by very much. D. increase quantity demanded by a small amount.