An increase in labor supply will:
a. decrease the equilibrium wage rate and increase the number of workers hired.
b. increase the equilibrium wage rate and decrease the number of workers hired.
c. decrease both the equilibrium wage rate and the number of workers hired.
d. increase both the equilibrium wage rate and the number of workers hired.
a
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If real GDP grows at 3 percent a year, the quantity of money grows at 5 percent a year, and the velocity of circulation is constant, then the price level must be
A) increasing at 8 percent a year. B) decreasing at 2 percent a year. C) increasing at 15 percent a year. D) increasing at 2 percent a year. E) decreasing at 8 percent a year.
Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP. Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?
A) Unemployment will rise. B) Prices will increase. C) Output will decrease. D) Short-run aggregate supply will shift to the right.
Suppose business decision makers become more optimistic about the future and, as a result, increase their investment spending by $20 billion. If the economy's marginal propensity to consume is 0.75, the equilibrium level of aggregate real GDP will increase by:
a. $15 billion. b. $20 billion. c. $50 billion. d. $80 billion.
Higher-income countries tend to have lower levels of absolute poverty because they
a. have more employment opportunities. b. have more public assistance. c. have greater entrepreneurship opportunities. d. All of the above.