Which of the following is most sensitive to the business cycle?
a. nondurable goods
b. durable goods
c. services
d. transfer payments
e. land
B
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Large projects that involve purchasing land from many landowners may not succeed due to the numerous expenses of negotiating so many different deals. These expenses, such as attorney's fees and bank fees, are examples of
A) transactions costs. B) eminent domain. C) the holdout problem. D) negative externalities.
Suppose Ramen noodles, an inexpensive but a quite tasty dish, are an inferior good. Why do grocery stores in college towns, that is, towns with a large fraction of college students, stock a lot of Ramen noodles?
What will be an ideal response?
An effective minimum wage tends to create unemployment among unskilled workers because it
A) reduces the demand for their labor services. B) increases the supply of their labor services. C) reduces the marginal productivity of their labor services. D) reduces the quantity demanded for their labor services while increasing the quantity supplied of their labor services. E) generates all of the above.
Other things the same, which of the following happens if the price level rises?
a. Money demand shifts rightward. b. Initially there is an excess demand for money in the money market. c. The interest rate rises. d. All of the above are correct.