In a perfectly competitive labor market, when a firm hires more labor
A. wages will increase.
B. wages will decrease.
C. wages will remain the same.
C. wages will remain the same.
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The basic assumption behind the J-curve effect is that
A) supply and demand for currencies are less elastic in the short run than in the long run. B) in the short run, supply will exceed demand; in the long run, they will be equal. C) an overshooting effect occurs as people adjust to the new information. D) investors tend to be overly cautious in currency instruments.
Which of the following assumptions made in deriving the simple deposit multiplier is unrealistic?
A) The Fed sets the required reserve ratio. B) The Fed is able to affect the level of reserves in the banking system. C) Banks loan out all of their excess reserves. D) The simple deposit multiplier is equal to 1 divided by the required reserve ratio.