For this question, assume productivity has been increasing by 5% per year. Also assume that workers' expectations of productivity growth adjust slowly over time. For this economy, a reduction in productivity growth from 5% to 2% will most likely cause which of the following to occur?
A) an increase in the natural rate of unemployment
B) a reduction in the real wage
C) an increase in the markup over labor costs
D) all of the above
E) none of the above
A
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A perfectly competitive firm has to charge the same price as every other firm in the market. Therefore, the firm
A) faces a perfectly elastic supply curve. B) is not able to make a profit in the short run. C) faces a perfectly inelastic demand curve. D) is a price taker.
In the model of monopolistic competition, an increase in industry output will cause individual firms' demand curves to become ________, which will ________ demand for higher-priced goods and ________ demand for lower-priced goods
A) flatter; reduce; increase B) steeper; reduce; increase C) flatter; increase; reduce D) steeper; increase; reduce E) horizontal; reduce; reduce
Most economists do not advocate a return to the gold standard because:
A. past willingness to exit the Gold Standard casts doubt on the credibility of committing to it again. B. it forces the central bank to fix the price of something we don't really care about while other prices can fluctuate a lot. C. inflation will depend on the rate that gold is mined. D. all of the answers given are correct.
Refer to Scenario 1.1 below to answer the question(s) that follow.SCENARIO 1.1: An economist wants to understand the relationship between minimum wages and the level of teenage unemployment. The economist collects data on the values of the minimum wage and the levels of teenage unemployment over time. The economist concludes that a 1% increase in minimum wage causes a 0.2% increase in teenage unemployment. From this information he concludes that the minimum wage is harmful to teenagers and should be reduced or eliminated to increase employment among teenagers.Refer to Scenario 1.1. The statement that a 1% increase in the minimum wage causes a 0.2% increase in teenage unemployment is an example of
A. positive economics. B. equity. C. Ockham's razor. D. normative economics.