According to Keynes, cyclical unemployment is caused by too
A. Much aggregate supply.
B. Much aggregate demand.
C. Little aggregate demand.
D. Little aggregate supply.
Answer: C
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Suppose the current equilibrium wage rate for housekeepers is $8.60 per hour. An increase in the minimum wage to $7.50 per hour leads to
A) a surplus of housekeepers. B) a shortage of housekeepers. C) no change in the market for housekeepers. D) an increase in the quantity of housekeepers supplied. E) unemployment of housekeepers.
The spending multiplier does not apply to investment spending by businesses
a. True b. False Indicate whether the statement is true or false
The purpose of an effluent fee is to
A. reward people producing externalities. B. correct for pollution while keeping the price of the good the same as before the correction. C. reduce the amount produced of a good and to raise the market price. D. encourage producers to keep the quantity produced the same while lowering the price.
Holding supply constant, an increase in demand leads to
A) lower prices and higher quantity supplied. B) lower prices and lower quantity supplied. C) higher prices and higher quantity supplied. D) higher prices and lower quantity supplied.