Long-term contracts are desirable for both firms and workers for each of the following reasons EXCEPT one. Which of the following does NOT explain the desirability of long-term contracts?
A) Wage negotiations are costly and time consuming on both sides.
B) Contracts insulate workers from changing economic conditions such as decreases in aggregate demand.
C) The incidence of strikes decreases because the contracts are binding for three years.
D) Contracts reduce uncertainty.
B
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Technology can be defined as the
A. ability to get more output from a given amount of inputs. B. act of putting new methods into effect. C. discovery of new ways of making products. D. result of savings.
In the above figure, start with the economy in equilibrium at point A. Then an unanticipated reduction in aggregate demand triggers a shift from AD1 to AD2. In the short run, this would cause
A) the price level to move from P1 to P2, but real Gross Domestic Product (GDP) would stay at Y1. B) the price level to fall from P1 to P2, real Gross Domestic Product (GDP) to fall from Y1 to Y2, and the rate of unemployment to increase. C) the price level to fall by some amount less than P1 but greater than P2, and the rate of unemployment would decrease. D) no change in either the price level or real Gross Domestic Product (GDP), but a decrease in unemployment.
Suppose that Thom experiences a greater loss in utility if he loses $50 than he would gain in utility if he wins $50 . This implies that Thom's
a. marginal utility diminishes as wealth rises, so he must be risk averse. b. marginal utility diminishes as wealth rises, but we can't tell from this if he is risk averse. c. marginal utility increases as wealth rises, so he must be risk averse. d. marginal utility increases as wealth rises, but we can't tell from this if he is risk averse.
Economic growth can be thought of as
A. a decrease in the price level. B. an increase in aggregate demand. C. an increase in long-run aggregate supply. D. an increase in the price level.