Explain the concept of statistical discrimination and give an example of it. How can it lead to discrimination even in the absence of prejudice?
What will be an ideal response?
Statistical discrimination involves judging people based on the average characteristics of the group to which they belong instead of productivity or personal characteristics. In labor markets, employers may stereotype workers by applying the average characteristics of the group in work assessments of individual members of that group. The practice may be profitable, and on average it may produce correct decisions, but fails to take into account individual skills and capabilities and limits opportunities for workers.
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The main reason that many businesses fail when the price level is falling is that ________
A) deflation causes a decline in short-run aggregate supply B) as prices fall, businesses are unable to predict the quantity of output they will be able to sell C) the real value of the firms assets declines in proportion to the decrease in the price level D) falling prices mean that regular loan payments become increasingly difficult
In a free-market economy, the pricing mechanism always operates to
A. produce an equitable distribution of income. B. provide an efficient allocation of resources. C. correct any inequality in distribution of output. D. equate consumers’ desires with ability to pay.
The crowding-out effect stresses that
a. an increase in government expenditures will stimulate aggregate demand and, thereby, help to prevent recessions. b. an increase in taxes will restrain aggregate demand and, thereby, help to control inflation. c. additional government borrowing to finance a larger deficit will increase the demand for loanable funds, causing real interest rates to rise. d. a budget deficit is a highly effective tool with which to combat recessions. e. both a and d are correct.
The larger the share of a good in a consumer's budget, holding everything else constant, the
A) more price elastic is a consumer's demand. B) more vertical is a consumer's demand curve. C) more price inelastic is a consumer's demand. D) more unit elastic is a consumer's demand.