Which of the following is an example of an international externality?
a. Loss of crops
b. Disease epidemic
c. Global warming
d. Dirty water
c. Global warming
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Moving along the potential GDP line, when the price level changes, the
i. real wage rate stays at the full-employment equilibrium level. ii. money wage rate changes by the same percentage. iii. money prices of non-labor resources change by the same percentage. A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii
Suppose the current equilibrium wage rate for housekeepers is $8.60 per hour. An increase in the minimum wage to $7.50 per hour leads to
A) a surplus of housekeepers. B) a shortage of housekeepers. C) no change in the market for housekeepers. D) an increase in the quantity of housekeepers supplied. E) unemployment of housekeepers.
An increase in labor supply would cause the IS curve to
A) shift up and to the right. B) shift down and to the left. C) remain unchanged. D) shift up and to the right only if people face borrowing constraints.
Why would a firm choose to remain in an industry in which it makes an economic profit of zero?
What will be an ideal response?