Suppose a fast food restaurant was one of many hiring workers, the minimum wage was $7.25 an hour and it was paying $7.25 an hour. Suppose the economy slides into recession such that the new equilibrium wage was $6.50 per hour. This would cause them to
A. do nothing differently.
B. pay between $7.25 and $9.00.
C. lower their offering wage to $6.50 an hour.
D. raise their offering wage to $9.00 an hour.
Answer: A
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Which of the following is a good proxy for the measure of economic prosperity when GDP per capita data is unavailable?
A) Measurements of producer surplus B) Measurements of consumer surplus C) Measurements of balance of payments D) Measurements of urbanization
Which category includes the largest number of firms?
a. sole proprietorship b. partnership c. corporation d. S-corporation e. limited partnerships
Automatic stabilizers in the economy include which of the following?
i. A progressive personal income tax. ii. Unemployment benefit/allowance. iii. Government action that increases tax rates. (a) i only. (b) i, ii and iii. (c) iii only. (d) i and ii only.
When developing countries borrow in international credit markets, many find that they must borrow in currencies other than their own (such as dollars, yen, or euros). Why are international creditors willing to make loans in dollars, yen, or euros but not in the developing countries' currencies?
A) Lenders are not well-informed about developing countries' economic situations. B) Lenders believe that the currencies of developing countries will always appreciate. C) Lenders receive higher interest rates on loans in dollars, yen, or euros than on loans made in the currencies of developing countries. D) Lenders believe that developing countries have a history of weak macroeconomic management and imprudent monetary and fiscal policies.