Refer to the figure above. The labor market is currently at point E. Which of the following is likely to happen if a recession hits the economy assuming that wages are flexible?
A) The labor market equilibrium will move from E to H.
B) The labor market equilibrium will move from E to D.
C) The labor market equilibrium will move from E to F.
D) The labor market equilibrium will move from E to G.
B
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
Suppose that choice sets are convex. State assumptions about tastes that are necessary and sufficient to guarantee that the solution to the consumer optimization problem is a unique interior solution. (Explain)
What will be an ideal response?
If a firm spends $600 more on advertising, its
A) ATC and MC curves shift upward. B) MC curve shifts upward and its ATC curve does not shift. C) ATC curve shifts upward and its MC curve does not shift. D) ATC curve shifts upward and its MC curve shifts downward.
Suppose a lobster supper in Maine costs fewer dollars than a Lobster supper in Paris, France. Explain why this is inconsistent with purchasing-power parity and explain why the inconsistency may exist