Employees at the university have negotiated a 5 percent increase in wages for the next year, based on their inflation expectations. If inflation is actually 6 percent over the next year, which of the following will occur?
A) Inflation will be 5 percent the following year.
B) Real wages for university employees will fall.
C) The increase in inflation is expected.
D) Unemployment of university employees will rise.
B
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
In the analysis of educational spending on outcomes, it is generally the case that
A. spending on raising teacher salaries and reducing class size matters. B. only the spending on reducing class size matters. C. neither higher salaries nor reduced class size matters. D. only the spending devoted to raising teacher salaries matters.
If the personal saving rate is 20% and personal saving is $20 billion, the value of personal disposable income is
A. $4 billion. B. $20 billion. C. $100 billion. D. $400 billion.
If there are no externalities, producing where price is greater than marginal cost is inefficient because for every unit produced, consumers derive benefits that are less than the cost of the resources needed to produce it.
Answer the following statement true (T) or false (F)