Suppose laid-off workers and other qualified unemployed workers offer to work for less than the wages being paid existing employed workers, but employers do not hire these workers for fear that existing workers will refuse to cooperate with them. This
situation best describes the:
A. efficiency wage theory.
B. theory of compensating wage differentials.
C. insider-outsider theory.
D. rational expectations theory.
C. insider-outsider theory.
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According to the standard competitive model, industries with increasing returns would not be profitable. However, economist Paul Romer argues that many industries may be experiencing increasing returns because
a. many important inputs are common property and therefore equally available to all firms. b. many important inputs may be nonrivalrous so that there is no limit to how much they can be used. c. of a decline in the number of monopsonistic firms in labor markets. d. of an increase in the number of firms that are natural monopolies.
Assume a closed economy with fixed taxes and the marginal propensity to consume is equal to 0.9. What is the government spending multiplier?
A) 10 B) 9 C) 5 D) 1
The more flexible prices are, the
A) greater demand shifts have to be to bring about a new equilibrium. B) larger the shifts in supply will be after a change in demand. C) greater the reliance by sellers to change the nominal price. D) more quickly a shock to the economy can be absorbed.
Economists first began studying the relationship between changes in aggregate expenditures and changes in GDP during
What will be an ideal response?