The flaw of the Friedman model of the business cycle is that it
A) assumes away output fluctuations.
B) assumes complete wage rigidity.
C) assumes unrealistic fooling of workers.
D) requires procyclical wage movements and continuous labor market equilibrium.
C
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Suppose wages in the market for plumbers increase. Some plumbers start taking on extra plumbing jobs while others cut back on the number of hours they work. What could explain this?
What will be an ideal response?
In the Airline Pricing Strategies case discussed in the text, a product with fewer rules and restrictions can command a higher price
Indicate whether the statement is true or false
A decrease in the effective tax rate on capital would cause the IS curve to
A) shift up and to the right. B) shift down and to the left. C) remain unchanged. D) remain unchanged if taxes are fully deductible from income; otherwise, shift up and to the right.
Crunchy Chips is a potato chip manufacturer. To produce the chips, Crunchy Chips needs to first peel and slice the potatoes and then fry them within two minutes of slicing to prevent browning. If Crunchy Chips is unable to fry the potatoes within two minutes, it must freeze the chips and later defrost them to fry them. Which of the following is true for Crunchy Chips?
A) Crunchy Chips faces a hold-up problem. B) Crunchy Chips has production technological interdependency. C) Vertically integrating the slicing and frying process will increase production costs. D) Crunchy Chips has no production technological interdependency.