Suppose that the government increases a tax paid by employers for hiring workers (for example, Social Security). What are the likely effects on real wages, output and employment? What are the likely magnitudes of these effects?
What will be an ideal response?
The tax increases will shift labor demand to the left, so real wages and employment will each go down. As employment goes down, so will output. The likely magnitudes of these effects is less clear. If labor supply is near vertical, the effects on wages will be large, but the effects on employment and output will be small. If labor supply is near horizontal, the effects on wages will be small, but the effects on employment and output will be large.
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If we want to use a measure of inflation that foreshadows price changes before they affect prices at the retail level, we would base our measure of inflation on
A) the household price index. B) the GDP deflator. C) the producer price index. D) the consumer price index.
Sustainable development means
(a) emphasizing the role of the market. (b) emphasizing the role of government. (c) meeting the present generation's needs without compromising the needs of future generations. (d) maintaining output growth at a constant rate.
Once decision makers fully adjust to an increase in the general price level,
a. the actual rate of unemployment will exceed the natural rate of unemployment. b. the actual rate of unemployment will be less than the natural rate of unemployment. c. the rate of output will exceed the economy's long-run capacity. d. output will return to the full-employment level.
Demand for the services of Los Angeles Dodgers' pitcher Clayton Kershaw is
A. an output demand. B. unrelated to his true productivity. C. horizontal. D. derived from the demand for Los Angeles Dodgers' tickets when Kershaw plays.