If the wage rate in the labor market is $17 and the productivity of workers decreases, which of the following statements is incorrect?
A. If wages are sticky, there will be a shortage in the labor market.
B. The labor demand curve shifts to the left.
C. If wages are flexible, there will be a decrease in wages.
D. If wages are sticky, there will be a surplus in the labor market.
Answer: A
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a. True b. False Indicate whether the statement is true or false
Self-fulfilling expectations challenge the idea of a well-functioning market, particularly in the exchange rate market, because the exchange rate:
A. is determined by rumors. B. may be driven by supply and demand forces. C. may not be driven by supply and demand forces. D. is determined by traders and speculators.
Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
Why is it unlikely that tax increases will be the way to eliminate current U.S. federal budget deficits?
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