What would be the likely result of a recessionary gap? If this leads to a fall in the nominal wage what impact it would have on the aggregate supply curve and on recessionary gap?
With equilibrium GDP below potential GDP, jobs will be difficult to find and the number of unemployed will increase in the economy. Businesses will have little trouble finding workers, and their current employees will be eager to hang on to their jobs. Such an environment makes it difficult for workers to win wage increases. Indeed, in extreme situations, wages may even fall?thereby shifting the aggregate supply curve outward. This will ultimately lead to a fall in the price level and deflation gradually erodes the recessionary gap.
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In the monetary small open-economy model with a fixed exchange rate, a temporary decrease in domestic total factor productivity in the absence of any other shocks
A) increases the current account surplus and increases the domestic money supply. B) increases the current account surplus and decreases the domestic money supply. C) increases the domestic money supply and decreases the current account surplus. D) decreases the domestic money supply and decreases the current account surplus.
The difference between a specific tariff and an ad valorem tariff is that a specific tariff
a. is a set amount of money per unit of a product, while an ad valorem tariff is a set percentage of product price b. is a set percentage of product price, while an ad valorem tariff is a set amount of money per unit of a product c. names a particular good to which the tariff applies, while an ad valorem tariff applies to large classes of products d. applies only to imports, while an ad valorem tariff applies only to exports e. sets a strict quota limit on the amount one individual can purchase, while an ad valorem tariff sets no such limit
Which of the following is incorrect regarding financial intermediaries? a. They link savers and borrowers
b. They earn profits by loaning money. c. They offer lower interest rates on savings than they charge on loans. d. They print money. e. They accept deposits.
If the natural rate of unemployment falls,
a. both the short-run and long-run Phillips curves shift left. b. the short-run Phillips curve shifts left, the long-run Phillips curve is unchanged. c. the short-run Phillips curve is unchanged, the long-run Phillips curve shifts right. d. the short-run and the long-run Phillips curves shift right.