A key element of real business cycle theory is that
a. labor supply is not responsive to changes in real wages.
b. labor supply is highly elastic.
c. as the wage increases, workers are richer and work less.
d. none of the above.
B
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The demand curve shown in the figure above reflects demand that is
A) perfectly elastic. B) perfectly inelastic. C) unit elastic. D) elastic but not perfectly elastic. E) inelastic but not perfectly inelastic.
People debate whether or not the U.S. should allow for greater oil exploration in Northern Alaska. According to the economic way of thinking, the debate is rooted in
A) different perceptions about the additional benefits and the additional costs of oil exploration in Northern Alaska. B) a complete lack of appreciation of the value of wildlife and the ecology of Northern Alaska. C) a complete lack of appreciation of the value of oil in world affairs. D) politics rather than economics.
If a commercial airline starts offering maxi-saver fares at huge discounts to passengers who purchase tickets at least 30 days in advance and agree to stay over a Saturday night, what is the most likely effect upon first-class passenger service?
A) First-class fares will rise somewhat to compensate for the loss on other fares. B) The demand for first-class service may fall somewhat because the price of a substitute good has decreased substantially. C) The marginal cost of first-class service will rise somewhat because the total cost must be allocated among all passengers. D) The marginal revenue from first-class service will rise somewhat because first-class service is now more clearly a superior good.
In September 2008, the Reserve Primary Fund, a money market mutual fund, found itself in the situation know as "breaking the buck." This means that
A) they could no longer afford to redeem shares at the par value of $1. B) they required shareholders to contribute a dollar more in fees each month. C) shareholders were able to redeem shares for more than a $1. D) shares earned more than a dollar in interest.