An increase in the supply of musicians ________ the number of musicians employed, and ________ the wages paid to musicians.
A. increases; increases
B. increases; decreases
C. decreases; increases
D. decreases; decreases
Answer: B
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Most economists support the idea of peak-load pricing on the grounds of
a. fairness in income distribution. b. efficiency in input usage. c. equality of opportunity. d. efficiency in output allocation.
Which scenario best explains the Keynesian transmission mechanism when the money supply increases while the money market is in a liquidity trap?
A) The interest rate and investment are not affected; there is no shift in the AD curve. B) The interest rate falls, investment rises, total expenditures rise, and the AD curve shifts rightward. C) The interest rate falls, investment falls instead of rising, and the AD curve ends up shifting leftward. D) The interest rate falls, but investment does not respond; there is no change in total expenditures and no shift in the AD curve.
A seller's reservation price is generally equal to:
A. the market price. B. the seller's marginal benefit from producing an additional unit. C. the buyer's reservation price. D. the seller's opportunity cost of producing an additional unit.
If a bank has actual reserves of $40,000 and a 20 percent reserve requirement, then the maximum amount of checkable deposits the bank can have if excess reserves are zero is:
A. $200,000. B. $80,000. C. $300,000. D. $20,000.