Q: How many economists does it take to screw in a light bulb?
A: None. If the light bulb really needed changing, market forces would have already caused it to happen.
This joke represents the view of
A) Keynesian economists.
B) classical economists.
C) economists who conclude that wages and prices are inflexible.
D) economists who conclude that money illusion is widespread.
B
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The O-ring theory places emphasis on
a. education of the labor force. b. skill complementarities. c. purchases of machinery and equipment by firms. d. none of the above.
Wes works as a delivery man and can work as many hours as he likes for $12 an hour. He typically works 40 hours a week. Recently, his pay has been cut, and Wes decides to work:
A. less hours, because the income effect dominates his labor supply decision. B. the same amount, because the price effect dominates his labor supply decision. C. more hours, because the price effect dominates his labor supply decision. D. more hours, because the income effect dominates his labor supply decision.
In the short run, an expanded money supply leads to:
a. a higher nominal interest rate. b. no change in the nominal interest rate. c. a lower nominal interest rate. d. an increase in the exchange rate.
Fractional reserve banking refers to a banking system in which
A. bank reserves are only a fraction of required reserves. B. bank reserves are only a fraction of total deposits. C. bank loans are less than bank reserves. D. bank deposits are less than bank reserves.