Which phrase finishes this statement best? The net effect of a union increasing wages
A. is to lower non-union wages by an offsetting amount so national income is not changed.
B. is that no one gains in the end since union shops cannot compete and do not survive.
C. is to misallocate labor toward non-union work unless unionization enhances union worker productivity by its actions.
D. is to increase wages in both union and non-union sectors.
Answer: C
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Even when the demand for one good is high, the price of the good is also affected by supply. The textbook illustrates this by comparing the price of two items that were auctioned on the same day
Which of the following describes the results of the auction? A) A letter written by Abraham Lincoln sold for a higher price than a letter written by John Wilkes Booth. B) A letter written by John Wilkes Booth sold for a higher price than a letter written by Abraham Lincoln. C) A letter written by Abraham Lincoln was sold for a higher price than a letter written by Adam Smith. D) A letter written by John Wilkes Booth sold for a higher price than a letter written by Lee Harvey Oswald.
Policy makers should manage aggregate demand so that it grows in line with the economy’s capacity to produce. This task is the realm of
A. growth policy. B. stabilization policy. C. labor policy. D. inflation policy.
In Figure 21.4, a firm that produces over 800 units of output should choose a plant with which short-run average total cost function?
A. ATC3 only. B. Either ATC2 or ATC3. C. ATC1 only. D. ATC2 only.
The government budget constraint implies that
A) government borrowings = government spending+ transfers - taxes and user charges. B) government borrowings = taxes and user charges + government spending - transfers C) government spending = transfers - taxes and user charges - government borrowing. D) government spending = government borrowing - transfers - taxes and user charges