Which of the following groups believes that the economy can achieve full employment without inflation through tax reductions, lower resource prices, and deregulation?
A. Classical school
B. Keynesian school
C. Supply-side school
D. Rational expectations school
Answer: C
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As the real wage increases, the quantity of labor demanded ________ and the quantity of labor supplied ________.
A. increases; increases B. decreases; decreases C. decreases; increases D. increases; decreases
The actual value of the price elasticity of demand is always
A) positive because of the law of demand. B) negative because of the law of demand. C) positive because of diminishing marginal utility. D) negative because percentages can only be negative.
By holding highly liquid assets to guard against sudden large withdrawals, banks: a. sacrifice safety
b. sacrifice profitability. c. increase profitability. d. diversify their portfolio. e. earn more interest than they could on business loans.
If aggregate demand shifts right, then eventually price level expectations rise. The increase in price level expectations causes the short-run aggregate-supply curve to shift to the left
a. True b. False Indicate whether the statement is true or false