Advocates for a structural solution to the Great Recession argued that:
A. government should cut taxes across the board to stimulate demand for goods and
services.
B. firms should be allowed to go bankrupt, allowing the economy to correct for resource
misallocations.
C. firms in financial distress should be taken over by the government and run for the public
good.
D. massive public works projects should be implemented to produce public capital, keep
people employed, and help workers maintain job skills.
Answer: B
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The most accurate procedure for finding out whether it is more efficient for a commercial airline to use 727s or 757s for its domestic flights is to
A) compare the fuel efficiency of 727s and 757s. B) compare the fuel efficiency and operating cost of 727s and 757s. C) compare the acquisition cost, operating cost, and fuel efficiency of 727s and 757s. D) compare the acquisition cost, operating cost, and fuel efficiency per passenger seat of 727s and 757s. E) see whether the airline has chosen to use 727s or 757s.
The upward-sloping character of the labor supply schedule assumes that the ________
A) the substitution effect is equal to the income effect B) the substitution effect is larger than the income effect C) the substitution effect is smaller than the income effect D) the ratio of real wages to the marginal product of labor is equal to the equilibrium nominal wage