If wages drop below the market equilibrium level in a competitive labor market:
A. unemployment will persist until the wage increases.
B. firms will be able to offer lower wages and still fill all the jobs they have.
C. firms will demand more labor than workers are willing to supply.
D. All of these statements are true.
Answer: C
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In economic theory, an unemployment rate of _________ considered desirable
a. 5 percent or less b. 9 to 10 percent c. Under 12 percent d. 18 percent
When expectations of inflation are revised downward, the short-run Phillips curve: a. shifts rightward. b. becomes steeper. c. shifts leftward
d. becomes flatter.
While the classical economists believed that both velocity and output are stable, Keynesians believe
a. velocity is stable and output is variable b. velocity and output are both variable c. output is stable and velocity is variable d. on this one point only, that the classical economists are right: that both output and velocity are stable e. at low levels of income both velocity and output are stable, but at high levels of income velocity becomes variable
Assuming an upward-sloping aggregate supply curve, when aggregate demand decreases, unemployment
A. Increases, and the price level decreases. B. Increases, and the price level increases. C. Decreases, and the price level decreases. D. Decreases, and the price level increases.