Refer to Figure 9-1. Based on the graph of the labor market above, if a minimum wage of $8 per hour is imposed, which of the following will result?
A) The quantity of labor demanded by firms will rise.
B) The quantity of labor demanded by firms will fall.
C) The unemployment rate will fall.
D) Both A and C will occur.
B
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If the real wage needs to decrease to restore equilibrium in a labor market, this can happen by
A) keeping the nominal wage constant and allowing deflation to allow the real wage to decline. B) keeping the nominal wage constant and allowing inflation to allow the real wage to decline. C) raising the nominal wage and allowing deflation to allow the real wage to decline. D) raising the nominal wage so long as there is no inflation occurring in the economy.
When insurance companies offer fair insurance,
A) risk-averse agents always purchase it. B) risk-neutral agents never purchase it. C) risk-loving agents always purchase it. D) nobody would purchase fair insurance.
The nominal exchange rate is about 2 Aruban florin per dollar. If a basket of goods in the United States costs $40, how many florins must a basket of goods in Aruba cost for purchasing-power parity to hold?
a. 20 florin b. 40 florin c. 60 florin d. 80 florin
To say that the natural rate of unemployment changes over time is to say that
a. the short-run Phillips curve shifts over time. b. the long-run Phillips curve shifts over time. c. the aggregate demand curve shifts over time. d. the Federal Reserve influences the natural rate of unemployment over time.