If Amber is willing to work additional hours if her wage rate increases, the substitution effect must outweigh the income effect.
Answer the following statement true (T) or false (F)
True
The substitution effect of wages occurs when an increased wage rate encourages people to work more hours (to substitute labor for leisure) and vice versa.
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Which of the following exchange rate policies uses a target exchange rate, but allows the target to change?
A) crawling peg B) flexible exchange rate C) fixed exchange rate D) moving target
If equilibrium GDP is $1 trillion greater than full employment GDP, and there is an inflationary gap of $250 billion, the multiplier is
A. zero. B. 1. C. 2.5. D. 4.
The idea that tariffs should be imposed to protect new and developing industries is referred to as
A) the start-up argument. B) the infant industry argument. C) the incubator business theory. D) the new markets theory.
Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. The demand for potatoes is Q = 10,000/p. If the long-run supply curve is horizontal, then how many firms will this industry sustain in the long run?
A) 0 B) 100 C) 50,000 D) There is not enough information to answer.