A union will try to increase employment for its members as long as the marginal wage is positive.
Answer the following statement true (T) or false (F)
False
The intersection of the marginal wage and labor supply curves determines the union's desired employment; this will not occur at the last point where the marginal wage is positive.
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The stock of high-powered money in the economy is $80 billion. The bank reserve-holding ratio is 0.12 and the public wishes to hold 10% of its deposits as cash. The money supply will be approximately
A) $363 billion assuming the 80 billion of high-powered money is held by banks. B) $400 billion assuming the 80 billion of high-powered money is held by the Fed or in bank vaults. C) $327 billion assuming the 80 billion of high-powered money is not held by the Fed or in bank vaults. D) $425 billion assuming the 80 billion of high-powered money is held by banks.
The end of the housing boom of the early 2000s can be illustrated by a decline in aggregate demand.
Answer the following statement true (T) or false (F)
The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
Suppose buyers in the used car market are willing to pay $5,000 for a plum (high-quality) used car and $2,500 for a lemon (low-quality) used car. If buyers believe that 50% of the used cars on the market are lemons (low quality), what would they be willing to pay for a used car?
A. $2500 B. $3000 C. $3750 D. $5000