ECON

One of the necessary conditions for the classical model to be TRUE is that

• wages and prices are fully flexible.

• wages and prices are partly flexible.

• wages and prices will not change.

• wages were flexible and prices are fixed.

A wage rate that is adjusted for changes in the price level is known as the

• real wage.

• nominal wage

• minimum wage

• functional wage

The marginal benefit of a worker to a firm is the value of the extra output that results when

• A) some workers are laid off and the remaining workers become more productive.

• B) an additional worker is hired.

• C) workers get paid for working overtime.

• D) work is outsourced to a foreign country.

What is the fundamental principle that economists use when evaluating the costs and benefits of production?

• A) supply and demand principle

• B) marginal principle

• C) cost of goods principle

• D) production principle

Increased labor demand will result in

• A) lower wages.

• B) no change in wages.

• C) higher wages.

• D) more employment benefits.

Real business cycle theory emphasizes the role of ________ in causing economic fluctuations.

• A) agriculture

• B) wars

• C) natural disasters

• D) technological change

Decreases in consumption, investment, or net exports caused by an increase in government purchases are known as

• A) diminishing returns.

• B) demand-side effects.

• C) crowding out.

• D) strategic substitution.

When developing classical models, there is an assumption that wages and prices will remain fixed relative to changes in supply and demand.

• TRUE

• FALSE

   

When an economy is at full employment, the unemployment rate is zero percent.

• TRUE

• FALSE

The nominal wage is the wage rate adjusted for changes in the price level

• TRUE

• FALSE