What is the main theoretical implication regarding the standard employer-based discrimination model?
A. Discrimination is not profitable.
B. Discrimination can only occur in competitive labor markets.
C. Discrimination can only occur if there are exactly two types of labor (e.g., white and black).
D. Workers do not care if firms are discriminatory.
E. Most firms are discriminatory.
Answer: A
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Which of the following increases aggregate supply in the short-run, everything else held constant?
A) an increase in the price of crude oil B) a successful wage push by workers C) expectations of a higher inflation D) a technological improvement that increases worker productivity
If an economy is operating inside its production possibilities curve for tanks and bread:
a. scarcity does not exist
b. all resources are being used efficiently.
c. production of bread can only increase by sacrificing the production of tanks.
d. production of bread and tanks can both increase.
Monopolistic competition is characterized by firms:
A. producing at optimal productive efficiency. B. making economic profits in the long run. C. producing where price equals marginal cost. D. producing differentiated products.
Use the money demand and money supply model to show the money market in equilibrium with an interest rate of 5 percent and the quantity of money of $800 billion. Suppose the Federal Reserve increases the money supply to $850 billion. At the previous
equilibrium interest rate of 5 percent, will households and firms now be holding more money or less money than they want to hold, and will they be buying or selling short-term financial assets? At the new equilibrium interest rate, households and firms will desire to hold the entire $850 billion of the money supply. What causes households and firms to want to hold the additional $50 billion of the money supply? What will be an ideal response?