The sticky-wage theory of the short-run aggregate-supply curve says that when the price level is higher than expected,
a) relative to prices wages are lower and employment rises.
b) relative to prices wages are higher and employment rises.
c) relative to prices wages are higher and employment falls.
d) relative to prices wages are lower and employment falls.
Ans: a) relative to prices wages are lower and employment rises.
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Paul Romer's theory of economic growth differs from traditional theories in that
A) Romer argues an investment-knowledge cycle can exist, but requires constant increases in investment rates, while traditional theories argue that investment rates can be constant. B) Romer argues that investment in human capital always occurs before investment in physical capital, while traditional theories emphasize the priority of physical capital. C) Romer argues an investment-knowledge cycle allows a one-time increase in investment to permanently increase a country's growth rate, while traditional theory argued such an investment would have only a short-term effect. D) Romer argues that investment in capital goods is not important in encouraging growth while investment in human capital is, whereas traditional theorists emphasize both human and physical capital.
A bank's required reserves are the fraction of deposits they are required by law to hold as reserves
Indicate whether the statement is true or false