If we consider the specificfactors model, the effect of an increase in exports on the real wages of workers:
a. is inconclusive because some goods' prices will be higher compared with the wage, and some will be lower.
b. absolutely increases the buying power of the real wage.
c. absolutely decreases the buying power of the real wage.
d. will encourage foreign workers to emigrate to the United States.
Ans: a. is inconclusive because some goods' prices will be higher compared with the wage, and some will be lower.
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If adding an initial 100 billion labor hours per year increases real GDP by $3 trillion, diminishing returns informs us that an additional 100 billion labor hours per year will increase real GDP by
A) exactly $3 trillion. B) less than $3 trillion. C) more than $3 trillion. D) either exactly $3 trillion or by less than $3 trillion, depending on whether the real wage rate remains constant or rises. E) some amount but there is not enough information to tell by how much.
Consider the market for bread. If the price of wheat rises, then the
A) demand curve for bread shifts leftward. B) supply curve of bread shifts leftward. C) price of bread falls. D) equilibrium quantity of bread increases. E) demand curve for bread shifts rightward.
In the above figure, the axis break in the x-axis
A) reflects the fact that for the years covered in the figure, the unemployment rate was never less than 3 percent. B) shows that there is no relationship between inflation and unemployment. C) misleadingly shows that inflation has changed very little even though the unemployment rate has increased a great deal. D) implies that for the years covered in the figure, the inflation rate was always greater than 1 percent.
A rise in the expected future exchange rate will tend to cause, other things the same ________
A) a depreciation of the domestic currency B) no effect on the value of the U.S. dollar in the short-run C) an appreciation of the domestic currency D) no effect on the value of the U.S. dollar