The income effect of a price change results in a
A) movement along the demand curve due to a change in relative prices.
B) shift of the demand curve when income changes.
C) shift of the demand curve due to a change in purchasing power brought about by the price change.
D) movement along the demand curve due to a change in purchasing power brought about by the price change.
D
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Which of the following is an important assumption about the labor market that is shared by both the original Keynesian model and the Friedman "Fooling Model?"
A) The supply of labor depends on expected real wages. B) The demand for labor is a function of nominal wages. C) Workers can be "off" their labor supply function in the short-run equilibrium. D) Firms can be "off" their labor demand function in the short-run equilibrium.
The infant industry argument for trade protectionism holds that
A) new industries sometimes need a protective environment in which to grow so that they can compete with older, more established foreign competitors. B) foreign competitors are often viewed as "infants" by large U.S. firms. C) tariffs are often preferred to quotas. D) quotas raise prices more than tariffs raise prices. E) a and c