Suppose OSHA requires a factory to install specific safety equipment to reduce the number of injuries in the factory. Would the number of accidents necessarily decline? Why or why not?
What will be an ideal response?
No. If the feedback effect is that workers who feel safer take fewer precautions or are more careless, the number of injuries could stay the same or even increase.
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The ease with which assets can be converted to cash for transactions is called
a) convertibility b) liquidity c) float d) seignorage e) the substitution effect
If the natural rate of unemployment equals 4 percent and the actual rate of unemployment equals 6 percent, then cyclical unemployment equals:
A. 10 percent. B. 2 percent. C. 6 percent. D. ?2 percent.
Choose the letter below that best represents the type of shift that would occur in the following situation in the United States: A technological breakthrough significantly reduces the cost of computerizing production lines. (See Figure 8.6.)
A. A. B. B. C. C. D. D.
According to the interest-rate-based monetary policy transmission mechanism, an increase in the money supply generates
A. an increase in aggregate supply since the supply of money is part of aggregate supply. B. increased spending on consumer goods and services directly, which causes an increase in aggregate demand. C. lower interest rates, which causes an increase in planned real investment spending and an increase in aggregate demand. D. an increase in nominal GDP and a change in the price level, but no change in real GDP.