Assume the union contract wage exceeds the market-clearing wage. If there is an increase in the labor supply, then the number of unemployed workers will ______ and the number of employed workers will _______.
1) increase; increase
2) decrease; increase
3) increase; decrease
4) increase; not change
Answer: 4) increase; not change
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According to Keynesian economic theory, the government should spend money to pay down the national debt.
a. during an economic depression. b. in order to balance the budget. c. only if it is willing to raise taxes. d. on the military instead of on domestic issues.
Which of the following statements is correct? Classical economists
a. believe demand as well as supply determines aggregate output. b. believed in an active role for government in managing the economy through tax policy. c. gave little explicit attention to factors that determined the overall demand for commodities. d. were worried about depressions that could come about because of too little government consumption.
Which of the following is the best example of a consumption good?
a. mp3 player b. farm c. factory d. bulldozer
The federal funds rate is the interest rate that:
A. the Fed charges to banks that borrow from it. B. banks charge the Fed for using their reserves. C. the Fed pays on bank reserves. D. banks charge each other for borrowed money.