Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2.
B. P3 and Y1.
C. P2 and Y2.
D. P2 and Y3.
Answer: D
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Which of the following shifts both the short-run aggregate supply curve and the long-run aggregate supply curve?
I. changes in the size of the labor force II. changes in the money wage rate III. changes in the quantity of capital A) II only B) both I and II C) both I and III D) I, II and III
Figure 7-2
In Figure 7-2, at an output of 500, marginal cost equals
A. 10. B. 20. C. 30. D. 40.
A tax on buyers decreases demand
a. True b. False Indicate whether the statement is true or false
Under a tournament pay scheme, the pay gap between a few "winners" (those who receive big promotions) and other employees exceeds the productivity differences between these two groups. The reason firms might use such a scheme is that they
a. gain tax advantages by paying a few workers large salaries and using fringe benefits to compensate the rest of the employees. b. hope to raise the productivity of those who receive big promotions because marginal productivity adjusts to equal wages. c. overestimate the productivity of those who receive big promotions and inadvertently pay them "too much." d. hope to raise the productivity of all other workers, who will work harder trying to gain a big promotion