Describe what happens to the FE line if government purchases increase.
What will be an ideal response?
In the classical model of the labor market, the rise in government purchases reduces people's perceived wealth, so they increase their labor supply. The increase in labor supply results in a new labor market equilibrium with increased employment and a lower real wage. The higher level of employment shifts the FE line to the right.
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To be counted as employed by the BLS, in the week before the survey the person must have worked for pay
A) at least 1 hour. B) at least 5 hours. C) more than 20 hours. D) 40 hours. E) None of the above is right because the BLS counts as employed anyone who works volunteer hours at a non-profit institution.
Suppose you solve a consumer's constrained 2-good optimization problem for a given economic environment --- and your answer contains a negative consumption level of good 2. Which of the following is a valid conclusion on your part:
A. The true optimum has the consumer consume none of good 1. B. The true optimum has the consumer consume none of good 2. C. There are multiple "true" optimal consumption bundles. D. The consumer will sell good 2. E. None of the above.
In the steady state, real GDP per worker ________, and real GDP per effective worker ________
A) will grow; will grow B) will grow; is constant C) is constant; will grow D) is constant; is constant
The CPI in November 2016 was equal to 241.4. This means that prices in November 2016 were
A. 241.4% higher than in 1982-1984. B. 120.7% higher than in 1982-1984. C. 2.414% higher than in 1982-1984. D. 141.4% higher than in 1982-1984.