Inflation:
a. Always affects productivity.
b. Is likely to affect productivity when the inflation rate is high and volatile.
c. Does not affect productivity.
d. Creates incentives to work more.
.B
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Refer to Pollutants. Suppose transactions costs are zero. Who should be made liable for the crop damage if the goal is to achieve an efficient outcome?
A chemical plant's production adds pollutants to a stream which irrigates a farm's crops. The pollutants damage the farm's crops, increasing the firm's costs by $800 per month. The crop damage may be eliminated in two ways: the chemical plant can install a new filtering system costing $300 per month, or the farm can install a new irrigation system costing $600 per month. a. The chemical plant should be made liable, because it is the source of the pollution. b. The chemical plant should be made liable, because it possesses the least-cost method of eliminating the externality. c. The farm should be made liable, because it can receive a bribe from the chemical plant. d. An efficient outcome will be achieved no matter who is made liable for the crop damage.
Hot dogs and hot dog buns are complements. If the price of a hot dog falls, then
A) the demand for hot dogs will increase. B) the demand for hot dog buns will increase. C) the quantity demanded of hot dog buns will increase. D) the quantity demanded of hotdogs will decrease. E) the demand for hot dog buns will decrease.
Suppose the upward sloping labor supply curve shifts leftward in a labor market with a single employer (monopsony). What happens to the equilibrium wage and level of employment in the market?
A) Wage and level of employment increase. B) Wage increases and level of employment declines. C) Wage decreases and level of employment increases. D) Wage and level of employment decline.
In the open-economy macroeconomic model, the supply curve of currency is vertical because the quantity of currency supplied does not depend on the real exchange rate
a. True b. False Indicate whether the statement is true or false