Refer to Table 17.2. If the price of output is $2 per unit and we observe the firm hiring four workers, if the firm is maximizing profit, the wage rate must be between ________ and ________.
A. $25; $45
B. $30; $35
C. $45; $60
D. $60; $80
Answer: D
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In order to calculate the real interest rate, simply:
A. add the rate of inflation to the nominal interest rate. B. divide the nominal interest earned by the rate of inflation. C. subtract the rate of inflation from the nominal interest rate. D. subtract the nominal interest rate from the rate of inflation.
Why do some policymakers support a consumption tax rather than an earnings tax?
a. The average tax rate would be lower under a consumption tax. b. A consumption tax would encourage people to save earned income. c. A consumption tax would raise more revenues than an income tax. d. The marginal tax rate would be higher under an earnings tax.
If the monetary authorities want to reduce the monetary multiplier, they should:
A. increase bank reserves. B. lower the legal reserve ratio. C. lower interest rates. D. raise the legal reserve ratio.
What does it mean for a firm to be a price taker in the labor market?
What will be an ideal response?