According to the classical? model, if an excess quantity of labor is supplied at a particular wage? level, full employment will be maintained because.
A. the equilibrium wage rate will rise to stimulate spending.
B. wages will fall rapidly to permit businesses to continue hiring everyone who wants to work.
C. the government will establish special work programs.
D. the government will step in and stimulate spending.
Answer: B. wages will fall rapidly to permit businesses to continue hiring everyone who wants to work.
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To offset the effect of households and firms deciding to hold more of their money in checking account deposits and less in currency, the Federal Reserve could
A) raise government spending. B) sell Treasury securities. C) raise bank taxes. D) lower the required reserve ratio.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, Point A necessarily represents
A. only hybrid cars being produced. B. an unattainable production point. C. what society wants. D. the economy's optimal production point.
Refer to the information provided in Figure 2.5 below to answer the question(s) that follow.
Figure 2.5Refer to Figure 2.5. The economy is currently at Point B. The opportunity cost of moving from Point B to Point A is the
A. 120 LCD TVs that must be forgone to produce 20 additional OLED TVs. B. 30 LCD TVs that must be forgone to produce 40 additional OLED TVs. C. 20 OLED TVs that must be forgone to produce 30 additional LCD TVs. D. 40 OLED TVs that must be forgone to produce 120 additional LCD TVs.
Trading in collateralized mortgage obligations (CMOs) takes place in the __________ market between __________
A) primary; specialists B) organized exchange; dealers C) over-the-counter; dealers D) primary; Ginnie Mae and Freddie Mac