Lower real wages make it ______.
a. more profitable to hire new workers
b. less profitable to hire new workers
c. more likely that short-term unemployment will increase
d. less likely that real wages will move toward equilibrium
a. more profitable to hire new workers
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One drawback in using fiscal policy as a stabilization tool is that fiscal policy:
A. is not useful for dealing with prolonged episodes of recession. B. effects are frequently offset by automatic stabilizers. C. affects potential output as well as aggregate expenditure. D. is too flexible to use to close output gaps.
Which of the following statements is the best example of the term ceteris paribus?
A) An economist holds other factors constant when he examines the relationship between tax rates and tax revenues. B) More money should be spent on cleaning up the environment. C) The government budget surplus was $200 billion in 2000 because the economy was growing. D) An increase in the budget surplus after an increase in tax rates implies that tax rate increases cause budget surpluses. E) When studying the effects of a budget deficit, an economist must take account of all the factors involved.
Prices communicate information about the relative value of resources in the marketplace. Which of the following would cause the marginal value and, hence, the price, of oranges to rise?
a. A freeze wipes out half of the Florida citrus groves. b. Orange juice is shown to reduce blood cholesterol levels. c. The price of grape, cranberry, and pineapple juice falls dramatically.
If income elasticity for a good or service is _______, then we can say that the good or service is ______.
A. negative; inferior B. negative; normal C. positive; inferior D. zero; normal