In the basic competitive model of labor markets, we assume that
A. all compensation is monetary and there are some fringe benefits included.
B. firms have discretion over the wages they pay to their employees.
C. all compensation is monetary and there are no fringe benefits.
D. market wage rates are not costlessly observable.
Answer: C
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If no fiscal policy changes are made, suppose the current aggregate demand curve will increase horizontally by $1,000 billion and cause inflation. If the marginal propensity to consume (MPC) is 0.80, federal policymakers could follow Keynesian economics and restrain inflation by decreasing:
a. government spending by $200 billion. b. taxes by $100 billion. c. taxes by $1,000 billion. d. government spending by $1,000 billion.
Tom carries on loud cellphone conversations in public places. He values such conversations at $1 per minute. Steve prefers piece and quiet. He would pay $2 per minute to avoid overhearing Tom's conversations. In this situation
a. Tom should quit using his cellphone because that would be a Pareto improvement b. Tom should quit using his cellphone because that would be efficient c. If Steve made a side payment of $3 to Tom, that would be a Pareto improvement d. If Steve paid Tom 50 cents per minute to quit talking, that would be a Pareto improvement e. If Steve paid Tom $1.50 per minute to quit talking, that would be a Pareto improvement
Tariffs are government policies designed to encourage international trade
a. True b. False
Opportunity cost is the value of the next best alternative to a given choice
a. True b. False Indicate whether the statement is true or false