Assume that policy makers are pursuing a fixed exchange rate regime. Assume that the economy is initially operating at the natural level (i.e., Y = Yn). Suppose fiscal policy makers increase taxes. This fiscal contraction will cause which of the following?
A) The real exchange rate will be permanently higher in the medium run.
B) The real exchange rate will be permanently lower in the medium run.
C) The effects of this devaluation on the real exchange rate will be ambiguous in the medium run.
D) The real exchange rate will be unchanged in the medium run.
E) none of the above
A
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The textbook argues that one of the trade-offs workers make is working for a small company or a large company. The small companies offer:
A.benefits that appeal to the workers that do not include job security or career advancement. B. job security but limited potential for advancement. C. both job security and ample potential for advancement. D. more potential for advancement but limited job security.
Economists Cade Massey and Richard Thaler analyzed whether teams in the National Football League distributed salaries efficiently. Massey and Thaler found that
A) both rookie players and veteran players are paid less than the value of their marginal products because of the lack of competition among teams. B) veteran players who sign as free agents are paid more relative to their marginal products than rookie players selected in the first round of the draft. C) rookies are paid salaries greater than their marginal products; veteran players are paid salaries less than their marginal products. D) the first few players selected in first round of the NFL draft are paid much higher salaries relative to their marginal products than players drafted later in the first round.