If the graph shown is displaying a competitive market and the market is currently offering a wage more than P*:
A. there would be a surplus of workers who want to work at that wage.
B. there would not be unemployment in the market.
C. firms would have a hard time finding workers.
D. equilibrium would be achieved.
A. there would be a surplus of workers who want to work at that wage.
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
Government expenditures are considered autonomous in the model meaning that changes are the result of:
A) changes in real income. B) changes in inflation. C) changes in unemployment. D) changes in policy decisions.
Relative prices formed in a market process
What will be an ideal response?
When an economy's production capacity is expanding:
A. nominal GDP, but not necessarily real GDP, is rising. B. net exports is always a positive amount. C. DI exceeds PI. D. gross domestic investment exceeds depreciation.