If all firms have rational expectations and wages and prices are flexible, there will be
A. high unemployment because firms know the "true model."
B. a shortage of labor because firms set their wage below the equilibrium wage rate.
C. no unemployment.
D. high unemployment because firms set their wages above the equilibrium wage rate.
Answer: C
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When the economy goes into recession, the biggest increase in unem-ployment is _________
A. structural because jobs are lost in most states B. cyclical because jobs are lost in many industries as they cut production C. frictional because the creation of jobs slows D. the combination of structural and frictional as few new jobs are created.
Explain how the short-run supply curve of the competitive firm is derived
The following table shows Jay's estimated annual benefits of holding different amounts of money.Average money holdingsTotal benefit$100$20$200$29$300$36$400$41$500$44 How much money will Jay hold if the nominal interest rate is 6 percent? (Assume he wants his money holdings to be in multiples of $100.)
A. $300 B. $100 C. $200 D. $400
What happens in the secondary market?
A) secondary inputs like electricity are sold B) a corporate financial manager will raise funds for expansion of the firm C) newly issued claims are sold by the borrowing firm to the initial buyer D) already issued claims are sold from one investor to another