The actual real wage must be below the equilibrium real wage in order to encourage firms to produce at any output level above the natural rate
Once workers realize this situation, their expected price level will gradually rise and they will demand a higher nominal wage. This description of a business cycle adjustment is part of which of the following theories? A) Classical model
B) original Keynesian model
C) Friedman fooling model
D) the RBC model
C
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The above figure shows the market for DVDs. The government decides that all citizens deserve to watch affordable DVDs so a price ceiling of $12 per DVD is placed on DVDs. After this price ceiling is in effect, deadweight loss equals ________
A) $1,600,000 B) $200,000 C) $800,000 D) $1,800,000 E) $400,000
When a deadweight loss occurs in a market, we can be certain that
A) taxes have been imposed in a market. B) the market is a monopoly. C) there underproduction in the market. D) the entire society experiences a loss.
An industry's long-run supply curve shows
A) the relationship in the long run between market price and quantity supplied. B) greater than normal profit. C) how average productivity is changing. D) how the government determines the price of the product.
High unemployment is undesirable because it
A) results in a loss of output. B) always increases inflation. C) always increases interest rates. D) reduces idle resources.