"Compensating wage differentials" arise because:
a. workers possess different skills.
b. workers prefer the characteristics of some to those of others.
c. firms pay higher wages for workers with higher marginal productivities.
d. firms discriminate in hiring.
b
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What is a monopsony?
What will be an ideal response?
Explain the role of expectations in determining the impact of a supply shock.
What will be an ideal response?
If aggregate demand shifts inward over a long period of time, with aggregate supply held constant, the economy should experience
A. unemployment. B. budget surpluses. C. stagflation. D. inflation.
Under a floating exchange-rate regime with a low degree of capital mobility, a change in the exchange-rate value of domestic currency following expansionary fiscal policy will tend to
A. cause a deficit in the financial account. B. decrease the country's holdings of official reserve assets. C. deteriorate the current account. D. give a trade-based stimulus to domestic production.