Samuelson and Solow believed that the Phillips curve
a. implied that low unemployment was associated with low inflation.
b. indicated that the aggregate supply and aggregate demand model was incorrect.
c. offered policymakers a menu of possible economic outcomes from which to choose.
d. All of the above are correct.
c
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The following OLS assumption is most likely violated by omitted variables bias:
A) E(ui Xi) = 0 B) (Xi, Yi) i=1,..., n are i.i.d draws from their joint distribution C) there are no outliers for Xi, ui D) there is heteroskedasticity
The difference between a firm's profit-maximizing quantity and the quantity that minimizes average cost is called:
a. economic profit. b. excess capacity. c. economic rent. d. excess supply.
Suppose a firm finds that it must raise wages for all of its workers every time it tries to expand its workforce. This means
A. The marginal factor cost curve is below the average cost of labor curve. B. The firm has market power. C. The labor market is perfectly competitive. D. It will produce more than it would in a competitive labor market.
Moral hazard
A. occurs when managers pursue profit maximization without regard to the interests of society in general. B. is the cause of principal-agent problems. C. occurs only rarely in modern corporations. D. exists when either party to a contract has an incentive to cancel the contract.