Some economists argue that Okun's Law overstates the cost of cyclical unemployment because
A. the cost of retraining workers must be offset against the loss in output that occurs when workers are unemployed.
B. it ignores the fact that leisure increases during a recession.
C. if efficiency wages prevail, and workers are paid their real wage, already employed workers will reduce their effort, reducing output.
D. it ignores the loss of government revenue and additional government expenditures that occur when unemployment rises.
Answer: B
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Which of the following changes will cause a downward movement along the money demand curve?
a. An increase in the interest rate b. A decrease in the interest rate c. A decrease in real GDP d. An increase in real GDP e. An increase in the price level
A simultaneous increase in demand and supply leads to an increase in price
Indicate whether the statement is true or false
Define the following terms. Give a complete and precise definition in one sentence
a. total utility b. marginal utility c. consumer's surplus d. "law" of demand
Conventional budget accounting practices tend to overstate deficits in inflationary periods because they
A. ignore the inflation tax. B. confuse repayment of principal with real interest expenditures. C. double count some expenditures. D. understate real interest rates.