A union can be viewed as a monopoly seller of a service. What are the three wage and employment strategies the union might use?
What will be an ideal response?
The union might try to employ all members, but the only way it can do this is to accept the market clearing wage. The market would do this without the union, so the union will probably not pursue this strategy. It can maximize members' income. This is found by finding the marginal revenue curve that goes with the demand curve for labor and finding the wage when marginal revenue would be zero. Finally, it can maximize wages for certain workers, which would mean more of the members go without jobs.
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Distinguish between real and nominal GDP. Which one is a better measure of the business cycle?
What will be an ideal response?
In comparing the yield to maturity on a Treasury bill with the yield on a discount basis on the same bill, we can say that the yield to maturity
A) will always be greater than the yield on a discount basis. B) will always be less than the yield on a discount basis. C) will always be equal to the yield on a discount basis, provided the holding period is the same as the number of years to maturity. D) rises whenever the yield on a discount basis falls.
To classical economists, it is always true that
a. there is zero unemployment. b. actual output is always equal to potential output. c. excess demand for goods is possible unless prices are forced to fall. d. the marginal product of labor exceeds the real wage.
Which of the following would be considered an investment when calculating GDP using the expenditure method?
a. Business expenses b. Stocks and bonds c. Annuities d. Retirement funds