In Figure 11.1, a decrease in consumer wealth is represented by a change in the consumption function from
A) to . B) C3 to C1. C) C2 to C1. D) C1 to C2.
B
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If the price level rises by 4 percent and workers' money wage rates increase by 2 percent, then the
A) quantity of labor supplied decreases. B) quantity of labor supplied increases. C) quantity of labor supplied does not change because there is no change in the real wage rate. D) the supply curve of labor shifts rightward.
From a Keynesian perspective, a short-run decrease in investment spending will shift the aggregate
A) supply curve to the left. B) supply curve to the right. C) demand curve to the left. D) demand curve to the right.
Activists believe that
A) monetary policy should not be used to smooth out the business cycle. B) fiscal policy should not be used to smooth out the business cycle. C) the frequent use of fiscal or monetary policy is called for to smooth out the business cycle. D) rules should be established for the conduct of both monetary and fiscal policy.
An industry utilizes capital and two types of labor. Unskilled labor is a substitute for capital while the skilled labor is complementary to capital. An increase in the price of capital will
A. induce the firms in the industry to cut back on all levels-capital, unskilled and skilled labor. B. cause the demand for labor to increase, raising wages of both skilled and unskilled labor. C. cause the demand for skilled labor to rise and the demand for unskilled labor to fall. D. cause the wage of unskilled labor to rise relative to the price of skilled labor.