When the economy enters into a recession, your employer is ________ to reduce your wages because ________
A) unlikely; output and input prices generally fall during recession
B) unlikely; lower wages reduce productivity and morale
C) likely; output prices always fall during recession
D) likely; aggregate demand is vertical in the long run
Answer: B
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Holding other factors constant, the implementation of a federal job retraining program would likely
A) reduce cyclical unemployment and the natural rate of unemployment. B) reduce structural unemployment and the natural rate of unemployment. C) reduce frictional unemployment and the natural rate of unemployment. D) increase the natural rate of unemployment.
During a study session for an economics exam with three other students, Peter Daltry commented on an example of a consumer who had to decide on number of slices of pizza and cups of Coca-Cola he would consume. Peter explained that "To maximize his
utility this consumer must equate the marginal utility per dollar for pizza and Coca-Cola." Was Peter's analysis correct? A) Peter described one of the conditions necessary for utility maximization. The consumer also must equate the marginal utility of pizza and the marginal utility of cups of Coca-Cola. B) Peter's statement is correct. C) Peter's statement is correct but we must also assume that the consumer is rational. D) Peter describes one of the conditions necessary for utility maximization. The second condition is that total spending on both goods must equal the amount available to be spent.
Banks and customers are most likely to be reluctant to use the full lending capacity made available by the Federal Reserve when the economy experiences
A. High inflation rates. B. A deep recession. C. Growth and low interest rates. D. Growth and inflation rates higher than the interest rate.
Relative to the first quarter of 2000, housing prices ________ in the United States between 2000 and 2009.
A. doubled B. increased by 150 percent C. decreased by 100 percent D. tripled