If wages decrease and workers choose to work more hours or more shifts, their behavior is evidence of
A. the substitution effect.
B. the income effect.
C. rational expectations.
D. rational ignorance.
Answer: B
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A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
One of the main roles of a central bank is:
A. managing the nation's money demand. B. coordinating the banking system to ensure a sound economy. C. accepting deposits from households and other private individuals. D. funding federal government spending.
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A) overvalued; 22 B) undervalued; 40 C) overvalued; 29 D) undervalued; 22 E) overvalued; 18
If the price a firm charges in a perfectly competitive industry is less than average total cost:
A. the firm is earning positive economic profit. B. the firm is earning zero economic profit. C. the firm is earning negative economic profit. D. it is not possible to determine anything about profits.