Graph of a labor market with effective minimum wage:
What will be an ideal response?
Upper triangle = Firms surplus (Above min wage)
Lower triangle = Workers surplus
Triangle from equ. point to dashes where connect with small triangles = Deadweight loss
Rectangle = Potential loss from search activity
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In an open economy with flexible exchange rates, monetary policy affects consumption and investment by changing the ________ and affects net exports by changing the ________.
A. growth of domestic real GDP; growth of foreign real GDP B. inflation rate; unemployment rate C. real interest rate; exchange rate D. exchange rate; real interest rate
The law of comparative advantage states that
A. countries grow fastest if exports exceed imports, with payment surpluses being received in gold. B. mutually beneficial trade can always take place between two countries whose pre-trade relative opportunity costs differ. C. two countries can both gain from trade only when they have very different tastes and preferences. D. trade benefits a country only if it has comparative advantages in all goods and services.
Of the $840 billion American Recovery and Reinvestment Act stimulus package which was enacted in 2009, approximately one-third took the form of ________ and two-thirds took the form of increases in ________
A) discretionary government spending; transfer payments B) tax rebates; tax cuts C) treasury bond purchases; the money supply D) tax cuts; government expenditures
In a large open economy, the home country's saving and investment equations are: Sd = 200 + 700rw and Id = 300 - 200rw. The foreign country's saving and investment equations are: Sd = 50 + 300rw and Id = 75 - 50rw. In equilibrium, the world real interest rate =
A. 0.40. B. 0.25. C. 0.20. D. 0.10.