Refer to the following graph. The price of capital (r) is $20.
What is the price of labor (w)?
A. $30
B. $35
C. $25
D. $20
E. none of the above
Answer: A
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Economic models are often based on assumptions because they:
A) help simplify complex real-world phenomena. B) help explain the past. C) help test models even when relevant data are unavailable. D) help predict the future with higher accuracy. A model is based on an assumption that an additional year of education increases a student's future wage by 20%.
Holding everything else constant, a decrease in the price of GPS systems will result in
A) a decrease in the supply of GPS systems. B) an increase in the quantity of GPS systems demanded. C) an increase in the demand for GPS systems. D) an decrease in the quantity of GPS systems demanded.
During the Global Economic Crisis, low unemployment rate in Germany is attributed to the policy of
A) "work-sharing." B) "money creation." C) "99-ers." D) "money powering."
Unemployment that results from business recessions that occur when aggregate demand is insufficient to create full employment is
A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.