The higher the real wage rate, the higher the labor force participation rate
Indicate whether the statement is true or false
TRUE
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The stimulus strategy behind tax cuts will only be effective if Ricardian equivalence:
A. holds, and people increase their spending. B. holds, and people save more. C. fails to hold, and people increase their spending. D. fails to hold, and people save more.
Moving production from a high-cost producer to a low-cost producer will
a. lower total surplus. b. raise total surplus. c. lower producer surplus. d. raise producer surplus but lower consumer surplus.
In the transition from the short run to the long run, the number of firms in a competitive industry is
a. fixed. b. increasing at a constant rate. c. decreasing. d. able to adjust to market conditions.
Friedman and Phelps argued that
a. if peoples' inflation expectations were fixed, then an increase in the money supply growth rate could not change output in the short or long run. b. if peoples' inflation expectations were fixed, then a decrease in the money supply growth rate could raise output and unemployment in the short run. c. any change in unemployment created by making aggregate demand increase more rapidly is temporary because people eventually revise their inflation expectations. d. None of the above is correct.