ABC Corp. is considering an investment project that costs $500 today. It expects the project will yield income of $200 at the end of years 1, 2, and 3. The interest rate must be ________ for the firm to undertake the project.

In the classical model, what occurs if a wage of $20/hour results in unemployed workers?

A) The wage rate will drop, more workers will be hired, and the unemployment rate falls. B) Producers will quickly create more jobs and hire the unemployed workers, so unemployment is short-lived. C) The workers will go on strike to demand that more jobs be created. D) The government will step in and order firms to hire more workers.

In the long run, an increase in aggregate demand causes the price level to _______ and the long-run aggregate supply curve to _____________

a. decrease; decrease b. increase; increase c. decrease; remain unchanged d. increase; remain unchanged