A reduction in the supply of labor will cause wages to:
A. decrease and employment to decrease.
B. increase and employment to increase.
C. increase and employment to decrease.
D. decrease and employment to increase.
Answer: C
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The primary benefit of monetary exchange compared to barter exchange is: a. the possibility of tracking trade for tax purposes
b. increased time devoted to finding trade partners. c. increased time devoted to shopping for what we want. d. increased efficiency in arranging transactions.
When a negative externality exists, the marginal social cost curve
a. is the same as the market supply curve b. is the same as the market demand curve c. lies above the market demand curve d. lies below the market supply curve e. lies above the market supply curve.
Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts less than the demand curve. As a result
A) both the equilibrium price and quantity of MP3 players will decrease. B) both the equilibrium price and quantity of MP3 players will increase. C) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease. D) the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.
The Ricardo-Barro effect holds that
A) equal increases in taxes and government expenditures have no effect on equilibrium real GDP. B) government budget deficits have no effect on the real interest rate. C) a government budget deficit crowds out private investment. D) a government budget deficit induces a decrease in saving that magnifies the crowding out effect.