You have noticed that there is a persistent shortage of teachers in an inner-city school district in your state. Based on this observation, you suspect that:
A. the demand for teachers in the inner-city school district is too low.
B. the wage for teachers in that district is higher than the wage in other districts.
C. there is an excess supply of teachers in other districts.
D. the wage for teachers in that district is lower than the equilibrium wage.
Answer: D
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Youland is hit by a recession. What will be the impact of a countercyclical policy on labor demand in Youland if nominal wages are downwardly rigid?
What will be an ideal response?
Positive economics
A) always gives an optimistic spin to economic news. B) is concerned with the economic policies that should be implemented. C) is objective. D) was not used by nineteenth century economists.
According to traditional Keynesian economics, expansionary fiscal policy initiated by the federal government
A) is never appropriate. B) is an appropriate way to prevent recessions and depressions. C) is an appropriate way to slow down an over-heated economy. D) will always fail due to crowding out effects.
Which of the following contributed to the weak recovery from the 2008-2009 recession?
a. the restrictive monetary policy followed by the Fed b. constant policy changes that created uncertainty and thereby retarded private business investment c. sharp reductions in federal spending that were designed to achieve a balanced federal budget d. failure to run budget deficits that were large enough to exert an impact on aggregate demand