If the Fed follows a high-growth monetary policy, but workers believe that the policy is time inconsistent, then low-wage contracts will be in force and unemployment will decline
a. True
b. False
Indicate whether the statement is true or false
True
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Which of the following assumptions is made while determining equilibrium wage and labor employed in the economy?
a. Information about job vacancies is difficult to obtain for workers. b. Mobility of workers is limited, i.e., workers can not switch jobs easily. c. Jobs vary widely in scope and responsibilities. d. All person-hours of labor are treated as identical.
Floating exchange rates are determined by the
a. forces of supply of and demand for currencies. b. governments with a trade surplus. c. governments with a trade deficit. d. IMF under the Bretton Woods Agreement.
Why does the Fed have imperfect control over the money supply?
a. Because the Fed does not know how much reserves will change when it buys or sells securities. b. Because of unpredictable changes in the public's desire to hold cash and banks' desires to hold reserves. c. Because of unpredictable changes in reserve requirements. d. Because of the secrecy of FOMC meetings, which lead to policy surprises.
If demand for farm crops is inelastic, a good harvest will cause farm revenues to:
A. Increase because of the increase in the quantity that farmers can sell B. Increase because of a downward movement along the supply curve, encouraging an increase in demand C. Decrease because of a percentage fall in price greater than the percentage increase in quantity sold D. Remain unchanged, because the increase in quantity that can be sold will be matched by an equal decrease in price