Keynes argued that
a. irrational waves of pessimism cause decreases in aggregate demand and increases in unemployment.
b. irrational waves of optimism cause decreases in aggregate demand and decreases in aggregate supply.
c. changes in business and consumer expectations generally stabilize the economy.
d. All of the above are correct.
a
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How does optimization in levels differ from optimization in differences? Assume that the city council has to choose one among the following three alternatives: setting up a school, setting up a hospital, and setting up a playground
The estimates of expected cost and benefit of all three projects are shown in the following table. How does the city council arrive at the optimal choice if both the techniques of optimization are implemented? Do the results vary? Project Cost ($) Benefit ($) Playground 15,000 30,000 School 20,000 50,000 Hospital 50,000 75,000
The real wage rate measures
a. nominal wages after taxes b. what workers are paid in terms of this year's dollars c. what workers are paid in terms of purchasing power d. what workers have available for spending after paying their bills e. the number of dollars earned by workers
If the price of grapes increases, total expenditures on grapes will decline if
a. there are few substitutes for grapes. b. the supply of grapes is inelastic. c. the demand for grapes is elastic. d. grapes are a normal good.
Frictional unemployment is the result of
What will be an ideal response?