Some economists believe that the behavior of unemployment in Europe and in the United States during the 1980s and 1990s
A) was the same because both markets experienced adverse labor market shocks.
B) differed because the real wage in Europe was rigid.
C) was the same because the real wage in Europe and the United States moved together.
D) differed because the United States experienced adverse labor market shocks but Europe did not.
B
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The incentive of holding excess reserves is equal to
A) the federal funds rate. B) the interest rate earned on excess reserves. C) the discount rate. D) none of the above.
In the scenario above, which of the following actions will maximize the industry's economic profit?
A) Both firms comply with the agreement. B) Both firms cheat on the agreement, producing more than the agreed amount. C) One of the firms complies with the agreement while the other firm cheats, producing more than the agreed amount. D) Because the firms are colluding, the profit does not change regardless of whether the firms comply with agreement or cheat on the agreement.