Shocks to the economy:
A. are unexpected changes in aggregate demand or aggregate supply.
B. only occur on the demand side.
C. only occur on the supply side.
D. refer to any economic events that change the level of output.
Answer: A
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Assume there are 2 million adult residents in the Los Angeles area to whom the per-resident PVB would accrue. Also assume that the estimated present value of costs (PVC) for this policy option is $2 billion. (i). Is this option feasible? Why or why not? Show your supporting calculations. (ii). If two other policy options have benefit-cost ratios of 1.23 and 1.05, can you determine which of the three is the most efficient? If so how? If not, why not?
The Los Angeles area has long been plagued by urban smog. Suppose that one of several ozone-reducing policy options is being evaluated by economists using benefit-cost analysis.
Real GDP measures ________.
A. base year output at current prices B. current output at current prices C. base year output at current exchange rates D. current output at base year prices
A large country imposes capital controls that prohibit foreign borrowing and lending by domestic residents. The country is currently running a financial account deficit. The imposition of the capital controls will cause
A) net exports to increase. B) real domestic interest rates to rise. C) real world interest rates to fall. D) desired national saving to fall.
If clerical workers in your state voted to have a union represent them in negotiations with employers, they would have monopoly power in wage determination
Employers would be in no position to exert monopsony power in their employment of clerks in this market due to the large number of employers in the market. Labor supply is given by LS = 50W - 100 (or, equivalently W = LS/50 + 2 ) Labor demand is given by LD = 700 - 25W (or, equivalently W = -LD/25 + 28 ) a. What is the equation for marginal revenue? b. Using the supply and demand equations, compute the wage rate and number of workers that would be hired when there is no union representation. c. Using the supply and demand equations, compute the wage rate and number of workers hired when the union represents workers and acts to maximize aggregate wages to all workers hired. d. Explain the impact of (c) on the competitive market.