Assume that workers have perfect information about changes in inflation. Which of the following statements is true in this context?
a. Wage rates will not adjust immediately to the price level on account of the fixed contracts.
b. The aggregate supply curve of the economy will become perfectly elastic.
c. The aggregate supply curve will shift to the right.
d. Nominal wage rates will always exceed the real wage rate.
e. The economy will continue to produce at the potential level of real GDP.
e
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Automobile companies typically make some of the parts for cars (for example, the body and engine) but not others (for example, the tires). Under what conditions would you expect an automobile manufacturer to be most likely to buy inputs from other companies?
a. when the specifications (size, style, etc.) of the inputs change frequently b. when the inputs being produced have little value c. when market prices have not been established for the inputs d. when it is relatively easy to measure the quantity and quality of the input
Finding the occupation or business activity in which you are relatively more productive helps you earn more money than otherwise would be the case. This reflects the
What will be an ideal response?
Opportunity cost is best defined as:
A. the value of the best forgone alternative. B. marginal cost minus marginal benefit. C. the time spent on an economic activity. D. the money cost of an economic decision.
In an economy with a fixed exchange rate, an increased demand for foreign goods would increase the supply of local currency, and the government would have to buy:
A. foreign currency in the foreign exchange market to prevent the domestic currency from depreciating. B. foreign currency in the foreign exchange market to prevent the domestic currency from appreciating. C. local currency in the foreign-exchange market to prevent the currency from depreciating. D. local currency in the foreign-exchange market to prevent the currency from appreciating.