Other things being equal, what is the effect of government deficit increases on interest rates?
A. Interest rates decline.
B. Interest rates rise.
C. There is no impact unless the Federal Reserve decides to alter the money supply.
D. Interest rates hold constant because the demand for credit decreases.
Answer: B
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If there was an adverse technological shock which decreased the demand for labor, then
A) Imports would increase. B) GDP would increase. C) Imports would decrease. D) GDP would decrease.
GDP per capita means GDP
A) divided by the capital stock. B) adjusted for inflation. C) in real terms. D) per person.
The equilibrium price will rise and the equilibrium quantity might increase, decrease, or stay the same when the
A) demand and the supply of a good both increase. B) demand for a good increases and the supply of it decreases. C) demand for a good decreases and the supply of it increases. D) demand and the supply of a good both decrease.
Consider two firms that are in the same industry and the industry is competitive. Initially each firm employees equal amounts of type A and type B labor
Labor is perfectly mobile between the two firms, and type A and type B labor are perfect substitutes. Diagram separately the equilibrium conditions in the labor markets for type A and type B labor. What must be true about the wages both firms face? Why? Now assume that one of the firms decides not to hire type A labor due to some type of discrimination. What do you think will happen to the type A labor supply for both firms? How do you think the action will affect the wages for type A labor relative to type B? Why?