In the RBC model, an adverse supply shock causes the decrease in natural real GDP to be minimized when the labor supply curve is
A) downward sloping and extremely flat.
B) upward-sloping and extremely flat.
C) upward-sloping and extremely steep.
D) vertical.
D
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Refer to the payoffs in the table above. Sears and Wal-Mart must decide whether to lower their prices based on the profits shown in the table. This game has
A) no Nash equilibrium. B) a Nash equilibrium: Sears keeps its prices high and Wal-Mart lowers its prices. C) a Nash equilibrium: both Sears and Wal-Mart keep prices high. D) a Nash equilibrium: both Sears and Wal-Mart lower prices.
During the 1990s positive technological change in the production of chicken caused the price of chicken to fall. Holding everything else constant, how would this affect the market for pork (a substitute for chicken)?
A) The demand for pork would decrease and the equilibrium price of pork would decrease. B) The demand for pork would decrease and the equilibrium price of pork would increase. C) The demand for pork would increase because consumers could afford to buy more chicken and pork. D) The supply of pork would increase and the equilibrium price of pork would decrease.