Assume that the labor market for auto mechanics is initially in equilibrium. Which of the following would lead to an increase in both the wage rate and employment for auto mechanics?
a. a decrease in the price of a substitutable input
b. a decrease in the price of a complementary input
c. an increase in training costs for auto mechanics
d. a decrease in wages in an alternate labor market
e. a decrease in demand for the output of firms employing auto mechanics
B
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If a pharmaceutical firm is researching ways to improve its heartburn medicine and discovers a technique that will improve its allergy medicine, one could conclude that economies of scope exist in that industry
Indicate whether the statement is true or false
Which of the following claims concerning the importance of effects that explain the slope of the U.S. aggregate-demand curve is correct?
a. The exchange-rate effect is relatively small because exports and imports are a small part of real GDP. b. The interest-rate effect is relatively small because investment spending is not very responsive to interest rate changes. c. The wealth effect is relatively large because money holdings are a significant portion of most households' wealth. d. None of the above is correct.