If we observe that every increase in income of $120 million generates an increase in consumption of $80 million, then the simple multiplier is

Refer to Figure 8.5. If the actual wage in this economy is represented by w2, employment in this economy is represented by

A) L1. B) L2. C) L3. D) 0.

Q: How many economists does it take to screw in a light bulb? A: None. If the light bulb really needed changing, market forces would have already caused it to happen. This joke represents the view of

A) classical economists. B) Keynesian economists. C) economists who conclude that money illusion is widespread. D) economists who conclude that wages and prices are inflexible.