Which of the following causes a leftward shift in the short-run aggregate supply curve?
A. An increase of goods prices while nominal incomes are unchanged.
B. An increase in nominal incomes.
C. An increase of full-employment real GDP.
D. An increase of personal consumption expenditures while the price level is unchanged.
Answer: B
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If a monopsonist offers a wage of $6, he finds that 1,200 people are willing to work for him. This means that the
a. marginal labor cost is $6 b. marginal labor cost is $200 c. total labor cost is $1,200 d. total labor cost is $7,200 e. $6 wage is too high
During and following the recession of 2008-2009, private investment was
a. strong, and this should increase the future productivity of workers. b. strong, and this will tend to weaken the future productivity of workers. c. weak, and this will tend to reduce the future productivity of workers. d. weak, and this will tend to increase the future productivity of workers.
Assume the price of capital falls relative to the price of labor and, as a result, the demand for labor increases. Therefore
A. the output effect is greater than the substitution effect. B. capital is very highly substitutable for labor. C. the substitution effect is greater than the output effect. D. the income effect is greater than the output effect.
If the cyclically adjusted budget deficit increases from $200 billion to $250 billion and GDP remains constant over the two years:
A. fiscal policy is expansionary. B. fiscal policy is neutral. C. fiscal policy is contractionary. D. the tax system is progressive.