Studies of wages by labor economists indicate that measurable variables such as age, job characteristics, years of education, and years of experience account for
a. virtually none of the variation in wages in our economy.
b. some, but less than 50 percent of the variation in wages in our economy.
c. about 75 percent of the variation in wages in our economy.
d. almost all of the variation in wages in our economy.
b
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When the natural unemployment rate changes, what happens to the short-run Phillips curve? To the long-run Phillips curve?
What will be an ideal response?
Refer to Figure 17-3. The shifts shown in the short-run and long-run Phillips curves between period 1 and period 2 could be explained by
A) an increase in the natural rate of unemployment from 5.5 to 6.8 percent. B) an increase in the expected inflation rate from 4.0 to 5.5 percent. C) either an increase in expected inflation from 4.0 to 5.5 percent or an increase in the natural rate of unemployment from 5.5 to 6.8 percent. D) None of the above is correct.
In the generalized dividend model, a future sales price far in the future does not affect the current stock price because
A) the present value cannot be computed. B) the present value is almost zero. C) the sales price does not affect the current price. D) the stock may never be sold.
A competitive market may misallocate resources over time because
A. current profits are worth more than future profits because of the time value of money. B. current profits are worth less than future profits because of the time value of money. C. the Federal Reserve sets interest rates different than the opportunity cost of consuming now versus later. D. the Federal Reserve always prefers capital investment over personal consumption.