Wages that are "sticky":
A. pull other prices up or down with them when they change.
B. have not changed, in real terms, for decades.
C. are stuck where they are and fail to adjust downwards in a recession.
D. are pegged to other variables, such as product prices.
Ans: C. are stuck where they are and fail to adjust downwards in a recession.
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Suppose the best investment you could make with $100,000 in cash is to purchase a government bond that pays 14 percent interest per year
If you decide to invest the money in your own business instead of buying the government bond, the opportunity cost of this financial capital is A) $1,400 per year. B) $100,000 per year. C) $14,000 per year. D) zero, because you already had the $100,000.
Which of the following usually results from high rates of unemployment?
a. decreased social tensions b. increased stock prices c. decreased political turnover during elections d. decreased potential output of goods
Refer to the graph shown. If a firm operating as if it were faced with a kinked demand curve believes that if it raises price from P2 to P1, its rival will not go along, then:
A. it probably will raise price, since lower output means lower costs and greater profit. B. D2 is the relevant demand curve. C. the demand curve used by the firm for decision making is highly inelastic. D. it probably won't raise price, since doing so would cause sales to drop from Q3 to Q1.
What is measured on the horizontal axis when we draw a graph of the long-run aggregate supply curve?
A. real GDP B. production of capital goods C. the price level D. production of consumer goods