One key assumption lying behind the policy irrelevance proposition is that
A) wages are "sticky" downward.
B) prices are "sticky" upward.
C) the rational expectations hypothesis is correct.
D) markets are not purely competitive.
C
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The Marshall-Lerner Condition states that, all else equal
A) nominal appreciation improves the current account if export and import volumes are sufficiently elastic with respect to the real exchange rate. B) real depreciation improves the current account if export and import volumes are sufficiently inelastic with respect to the real exchange rate. C) real appreciation improves the current account if export and import volumes are sufficiently elastic with respect to the real exchange rate. D) real depreciation improves the current account if export and import volumes are sufficiently elastic with respect to the real exchange rate. E) the sum of import and export elasticities must be equal to one in order for depreciation to occur.
If a perfectly competitive firm is currently employing workers to the point where the value of the last worker's marginal product is equal to the wage rate, and the government imposes a minimum wage higher than the value of the worker's marginal
product, we can predict that A) the firm will pay the higher wage rate and not change the number of workers hired. B) the firm will no longer employ the marginal worker. C) the firm will increase its price. D) the firm will employ more workers.