The magnification of small changes in spending into larger changes in output and income is produced by:
A. the average propensity to consume.
B. saving.
C. the multiplier effect.
D. the average propensity to save.
Answer: C
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If real salaries increase but nominal salaries do not, this means that
A) the purchasing power of money has decreased. B) prices have risen. C) prices have not changed. D) prices have fallen.
A firm's demand for labor increases and its demand curve for labor shifts rightward if
A) the wage rate falls. B) the price of its product falls. C) its value of marginal product decreases. D) an advance in technology increases the marginal product of labor.
In Figure 1 below if the economy were at Y3 then we would expect there to be:
A. a reduction in inventories.
B. an increase in inventories.
C. no change in inventories.
D. an increase in consumption spending.
Assuming that all other things are equal, including the wage, which of the following statements is correct?
a. The quantity of labor supplied for difficult jobs exceeds that for easy jobs. b. The quantity of labor supplied for fun jobs exceeds that for dull jobs. c. The quantity of labor supplied for dangerous jobs exceeds that for safe jobs. d. All of the above are correct.