If a union successfully negotiates for higher wages and benefits for steel workers, what impact would this have on supply and demand in the market for steel, assuming no other changes take place in this market?
What will be an ideal response?
An increase in wages and benefits will shift the supply curve to the left, but will not shift the demand curve. This will increase the equilibrium price and decrease the equilibrium quantity in the market for steel.
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To prevent cost-push inflation
A) there must not be an excess demand for money B) interest rates must not rise C) there must not be an increase in government purchases D) the Fed must not let the quantity of money rise persistently.
In the basic Keynesian model, an increase in government purchases:
A. increases potential output. B. increases short-run equilibrium output. C. reduces short-run equilibrium output. D. reduces potential output.
In a customs union, members remove all trade barriers among themselves and adopt a common set of external barriers.
Answer the following statement true (T) or false (F)
A reduction in the marginal propensity to save from .4 to .3 will cause
A) the ZZ line to become steeper and a given change in autonomous consumption (c0 ) to have a smaller effect on output. B) the ZZ line to become steeper and a given change in autonomous consumption (c0 ) to have a larger effect on output. C) the ZZ line to become flatter and a given change in autonomous consumption (c0 ) to have a smaller effect on output. D) the ZZ line to become flatter and a given change in autonomous consumption (c0 ) to have a larger effect on output.