The classical labor supply function is shown as
a. Ns = g(P/W).
b. Ns = g(W/P).
c. Ns = t(W/Pe).
d. Ns = t(Pe/W).
B
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One potential weakness of the coordination failure model as an explanation of business cycles is that
A) evidence supporting intertemporal substitution as an important determinant of labor supply is weak. B) evidence supporting the existence of increasing returns at the aggregate level is weak. C) it fails to explain several of the key business cycle regularities. D) it requires that consumers not behave in a rational manner.
Assume that the uncovered interest parity condition holds. Also assume that the U.S. interest rate is greater than the U.K. interest rate. Given this information, we know that investors expect
A) the pound to depreciate. B) the pound to appreciate. C) the dollar-pound exchange rate to remain fixed. D) the U.S. interest rate to fall. E) none of the above