According to real business cycle theory, real wages are _____ correlated with employment and the portion of the population that is not in the labor market _____ with higher real wages
a. positively; rises.
b. negatively, does not change.
c. negatively, rises.
d. positively; falls.
e. none of the above.
D
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You grow poplar trees. The lumber yard purchases cut trees from you. The trees grow 1 foot per year. Assuming a constant real price per foot for poplar and a real interest rate of 3%, would you sell a 20-foot tree today?
What will be an ideal response?
A firm that is the sole producer of a good or service with no close substitutes is called a:
A. perfectly competitive firm. B. monopolist. C. oligopolist. D. monopolistically competitive firm.
Suppose purchasing power parity exists in the car stereo market in the United States and Australia. If a car stereo costs $230 in the United States and the exchange rate is $1 = $AUD1.67, the same car stereo may be purchased in Australia for approximately:
a. $AUD 138. b. $AUD 230. c. $AUD 2,300. d. $AUD 384. e. $AUD 108.
Suppose that a drought significantly reduces agricultural production one year. In addition, suppose the Fed accommodates this supply shock by implementing an expansionary monetary policy. Which of the following would you expect to occur as a result of these changes?
a. The short-run aggregate supply curve will shift to the right, the short-run Phillips Curve will shift to the left, and the accommodating monetary policy will raise inflation while lowering unemployment. b. The short-run aggregate supply curve will shift to the right, the short-run Phillips Curve will shift to the left, and the accommodating monetary policy will increase unemployment while lowering inflation. c. The short-run aggregate supply curve will shift to the left, the short-run Phillips Curve will shift to the right, and the accommodating monetary policy will raise inflation while lowering unemployment. d. The short-run aggregate supply curve will shift to the left, the short-run Phillips Curve will shift to the right, and the accommodating monetary policy will increase unemployment while lowering inflation.