Which of the following is a New Keynesian explanation of wage and price stickiness must be discounted?
A) overlapping wage contracts
B) menu costs
C) efficiency wages
D) all of the above
D
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When the marginal product ________, the marginal cost ________
A) increases; remains the same B) remains the same; increases C) increases; increases D) increases; decreases
One way to prevent workers from shirking is to
A) hire only workers who are predisposed toward shirking. B) hire only workers who are predisposed toward not shirking. C) reduce monitoring to zero. D) pay workers a fixed fee.
Suppose Lisa spends all of her money on books and coffee. When the price of coffee decreases, the
A) substitution effect on coffee is positive, and the income effect on coffee is positive. B) substitution effect on coffee is ambiguous, and the income effect on coffee is ambiguous. C) substitution effect on coffee is positive, and the income effect on coffee is ambiguous. D) substitution effect on coffee is ambiguous, and the income effect on coffee is positive.
If the expected inflation rate was 2.5%, the expected real interest rate was 4.0%, and the actual inflation rate turned out to be 3.2%, then the real interest rate equals
A. 3.2%. B. 4.7%. C. 3.3%. D. 1.7%.