A nation whose labor market is highly integrated with other nations in a currency union is more ______ to join because ______.
A) unlikely; workers would suffer real wage declines if they have competition from foreign workers
B) unlikely; firms would find it expensive to hire workers if they have to pay in the common currency
C) likely; labor market integration means that when there are asymmetric demand shocks the adjustment can be eased by migration of workers
D) likely; labor force rules and policies can be harmonized more easily
Ans: C) likely; labor market integration means that when there are asymmetric demand shocks the adjustment can be eased by migration of workers
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Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher
Assuming a long-run aggregate supply curve, a decrease in taxes results in ________ in output and ________ in price level
A) no change; an increase B) an increase; no change C) a decrease; a decrease D) no change; a decrease
Which of the following is not necessarily a characteristic of perfect competition?
a. low prices b. a large number of buyers and sellers c. a homogeneous product d. perfect information e. easy entry and exit in the long run
Randomized sampling is not feasible in many policy studies, so researchers turn to different strategies to estimate causality from observational data. One such approach is difference-in-differences (DiD). Which of the following statements best describes DiD?
a. DiD is the only approach that uses data from individuals in both groups that are exposed to the treatment. b. DiD is a hybrid approach that utilizes a cross-section of individuals across time to measure differences. c. DiD uses differences in individual characteristics to divide the data into two groups. d. The convenient feature of DiD is that the two groups do not need to experience similar trends in the outcome variable during the pretreatment time period.