In a competitive labor market, if a firm pays a worker less than that worker's VMP, then in the long run:
A. competing firms will hire the worker away.
B. the supply of workers will fall.
C. the firm will earn positive economic profits.
D. the worker will have no incentive to work hard.
Answer: A
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A currency is undervalued if its exchange rate vis-à-vis a foreign currency is:
A) not pegged. B) at the equilibrium exchange rate. C) above the equilibrium exchange rate. D) below the equilibrium exchange rate.
Suppose that there is an increase in expected future disposable income and simultaneously an increase in the expected profitability of investment
As a result, the equilibrium real interest rate ________ and the equilibrium quantity of loanable funds ________. A) rises; decreases B) falls; might increase, decrease, or not change C) rises; might increase, decrease, or not change D) rises; increases E) falls; increases