In a perfectly competitive labor market, if the value of marginal product of the last worker hired is $20 and the wage rate is $25, then the firm should:
A. hire fewer workers.
B. either hire more or fewer workers, depending on the price of the firm's output.
C. not change the number of workers it hires.
D. hire more workers.
Answer: A
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If the social benefit is greater than the private benefit in a particular market, then the private equilibrium will be at a quantity:
A. greater than the socially optimal level. B. equal to the socially optimal level. C. less than the socially optimal level. D. greater than or less than the socially optimum level, depending on the size of the external costs.
The portion of the Obama stimulus package that provided unemployment benefits for longer than the usual 26 weeks is best thought of as
A. discretionary (and contractionary) fiscal policy. B. discretionary (and expansionary) fiscal policy. C. monetary policy. D. nondiscretionary fiscal policy.
The U.S. economy is currently experiencing a standard business cycle.
Answer the following statement true (T) or false (F)
The aggregate demand curve is
A. vertical if full employment exists. B. horizontal when there is considerable unemployment in the economy. C. downward sloping because of the interest rate, wealth or real balances, and foreign-purchases effects. D. downward sloping because production costs decrease as real domestic output increases.