If the minimum wage is set above the equilibrium wage, after taking into account the resources lost in job search, the firms' surplus ________ and the workers' surplus ________
A) increases; increases
B) increases; decreases.
C) decreases; increases
D) decreases; decreases
E) does not change; decreases
D
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One reason why the government may not choose to close a recessionary gap by raising both taxes and spending and thereby keeping the budget balanced is because it
a. leaves undone the problem of unemployment b. can create inflation c. may involve raising taxes too high for political comfort d. eventually leads to deficit budgets e. does not impact on aggregate demand which is where the problem lies
Economic principles and models are tools for ascertaining ________ and _________ within an economic system.
Fill in the blank(s) with the appropriate word(s).
Long-run aggregate supply curve corresponds to
A. the economy inside its production possibilities curve. B. real GDP when the economy is above full employment. C. the economy outside its production possibilities curve. D. real GDP when the economy is at full employment.
Cross-price elasticity measures the responsiveness of the price of good A to a change in the price of good B
a. True b. False