In discussing discrimination and the wage differences that exist between men and women and between blacks and whites, it has been said that "the disease is political even if the symptom is economic." What does this mean?
a. Wage differences persist because the political system has failed to enact laws to equalize wages among all groups.
b. Wage differences exist because of past discrimination on the part of political bodies such as city councils and school boards.
c. Wage differences exist because of the differences in the political views of the different groups.
d. Wage differences exist because the political system is biased against paying compensating differentials.
b
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
The rationale for rent control is that it protects moderate- to low-income families from the burden of rapidly rising rents and from eviction if they are unable to pay. It also prevents landlords from reaping windfalls as property values rise. Opponents note that rent controls usually lead to a reduced supply of rental housing and shortages. The proponents of rent controls support them primarily on the grounds of
A. efficiency. B. equality. C. externalities. D. cost disease of services.
The effect of a shift in the aggregate demand curve due to an increase in consumer confidence will be:
A. a decrease in prices only in the long run; output will remain the same. B. an increase in both prices and output in the short run. C. a decrease in both prices and output in the short run. D. an increase in output only in the long run; prices will remain the same.
Suppose that the elasticity of demand for a product is 0.5 and quantity demanded increases by 20%. What must the percentage decrease in price have been?
A. 0.5% B. 5% C. 10% D. 40%