The fact that some people will work hard to earn a lot of money while others will be content with much less income indicates that
a. worker preferences are an important source of earning differentials.
b. economics ranks one set of worker preferences as more desirable than another.
c. some people can be paid less for doing hard work while others have to be paid a premium for doing a similar task.
d. skill levels of laborers are a minor consideration in wage rate determination.
A
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A reason that the inflation rate did not increase substantially following the recession of 2007-2009 is that
A) the increase in the monetary base was accompanied by larger-than expected increases in the money supply. B) even though the recovery was slow, the U.S. economy benefitted from a small output gap. C) the recovery was slow and the unemployment rate remained high through 2012. D) the Federal Reserve quickly implemented contractionary policy to prevent an increase in the inflation rate.
There is an adverse supply shock. In response the Federal Reserve pursues an expansionary monetary policy. Taking into account both the shock and the Federal Reserve's policy, which of the following are we sure of?
a. unemployment will be higher b. unemployment will be lower c. inflation will be higher d. inflation will be lower