In the market for labor, the price of labor is the:
A. real wage.
B. same as price of the product produced by the labor.
C. number of hours employed per year.
D. marginal product of labor.
Answer: A
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Between September 2007 and March 2008 there was a substantial reduction in the demand for housing. What action did the Fed take in response to the reduction in the demand for housing?
A) The Federal Reserve cut the federal funds rate seven times. B) The Federal Reserve decreased the required reserve rate. C) The Federal Reserve raised the discount rate by 3 percentage points. D) The Fed conducted open market sales of Treasury securities.
If prices in the New Keynesian model were perfectly flexible, then
A) there would be a role for monetary policy. B) the output gap would be positive. C) the equilibrium real interest rate would be the natural rate of interest. D) the output gap would be negative.