What is TRUE when the credit market is in equilibrium?
A) The legal minimum wage equals the actual wage.
B) Desired saving equals desired investment.
C) Desired employment equals the number of jobs available.
D) Desired consumption spending equals the total of saving plus investment.
Answer: B) Desired saving equals desired investment.
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
If the firm hires more labor, everything else held constant, then
A) the marginal product of labor falls. B) output decreases. C) there is an increase in the marginal product of labor. D) total factor productivity falls.
A car dealership union negotiates a contract that dramatically increases all salesmen salaries. If one of the salesman is thinking of changing careers to be a hardware salesman, his opportunity cost
a. would not be affected b. would increase if he continued to be a car salesman c. of becoming a hardware salesman would increase d. none of the above
Assume that an economy's real GDP multiplier is 4 . If this economy is in equilibrium at $2,000 billion, then which one of the following actions will bring it to a full employment equilibrium of $1,500 billion?
a. $500 billion spending cut. b. $500 billion spending increase. c. $125 billion spending cut. d. $125 billion spending increase. e. $2,000 billion spending cut.