The "no shirking constraint" (NSC) curve never crosses the supply of labor curve, so
A) the market never reaches equilibrium.
B) there is always full employment in equilibrium.
C) there is always some unemployment in equilibrium.
D) the efficiency wage is always lower than the market-clearing wage.
E) the gap between the NSC curve and the supply of labor curve equals the difference between the efficiency wage and the market-clearing wage.
C
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Holding all else equal, if the U.S. government imposes tariffs on imported products, then the equilibrium value of the U.S. dollar will:
A. be determined by the Federal Reserve. B. depreciate. C. remain fixed. D. appreciate
Suppose that there is a negative aggregate demand shock and the central bank commits to an inflation rate target. But if the commitment is not credible, then
A) the public's expected inflation will remain unchanged. B) the short-run aggregate supply curve will rise. C) economic contraction will be worse. D) all of the above. E) both B and C.
Perfect competition is characterized by a(n)
a. large number of buyers and sellers, each one a price taker b. single seller and many buyers c. small number of sellers offering differentiated products d. intense rivalry among several competitors e. small number of buyers and sellers who negotiate the market price
When the Fed sells bonds and drains reserves from the banking system, thereby reducing the supply of money, this policy will
a. decrease short-term interest rates to a greater degree than long-term interest rates. b. decrease long-term interest rates to a greater degree than short-term interest rates. c. increase short-term interest rates to a greater degree than long-term interest rates. d. increase long-term interest rates to a greater degree than short-term interest rates.