Diagram a model of supply and demand for a competitive labor market with a minimum wage in effect. Identify a group that gains and a group that loses when a minimum wage is imposed.
What will be an ideal response?
See Figure 30.8 for the model in The Economy Today or Figure 16.8 in The Micro Economy Today. Workers who are able to keep their jobs at the higher wage rates gain, while other workers lose their jobs because of the decreased quantity demanded of workers at the higher wage.
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Assuming all excess reserves are loaned out, if the reserve ratio is 3.33 percent, the money multiplier will be equal to
A) 0.67. B) 3.33. C) 6.67. D) 30.
The concept of ________ is based on the common-sense notion that a dollar paid to you in the future is less valuable to you than a dollar today
A) present value B) future value C) interest D) deflation
In the long run, if government increases spending ________
A) interest rates decrease B) it crowds out private investment C) saving increases D) all of the above E) none of the above
Which of the following is true of an externality?
a. An externality enhances the efficiency of the market system. b. An externality is not an economic problem because it is external to the market. c. An externality is a cost borne by the people who are directly or indirectly involved in the production of a good or service. d. An externality accrues to someone who had nothing to do with the production or consumption of a good or service. e. An externality refers to some unexpected change in the equilibrium price or quantity of a product.