Moving along the potential GDP line, the money wage rate changes by the same percentage as the change in the price level so that the real wage rate
A) stays at the full-employment equilibrium level.
B) increases.
C) might either increase or decrease.
D) decreases.
E) stays the same, though not necessarily at the full-employment equilibrium level.
A
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Moral hazard exists chiefly because of
A) economies of scale. B) diseconomies of scale. C) private information. D) public information.
Refer to Figure 10-1. Which of the following statements is true?
A) Quantities Q0 and Q1 are the utility-maximizing quantities of hoagies at two different prices of hoagies. B) Quantities Q0 and Q1 are derived independently of the utility-maximizing model. C) Quantity Q0 could be a utility-maximizing choice if the price is $5.75, but quantity Q1 may not be because we have no information on the marginal utility per dollar when price changes. D) Quantities Q0 and Q1 may not necessarily be the utility-maximizing quantities of hoagies at two different prices because we have no information on the consumer's budget or the price of other goods.