When oil prices increased to record levels in the 1970s, salaries dramatically increased for petroleum geologists skilled in finding oil. Those geologists who moved from other areas to the higher paying jobs were
a. seeking to profit from society's needs rather than following the guidance of the invisible hand, which would have led them to seek jobs serving society rather than jobs with higher pay.
b. following the guidance of the invisible hand and probably serving society's best interests as well as their own.
c. causing oil prices to rise even more by moving to jobs with higher salaries.
d. helping themselves but hurting the economy.
B
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A beneficial oil-price shock increases labor demand. What happens to current employment and the real wage rate?
A) Both employment and the real wage rate would increase. B) Both employment and the real wage rate would decrease. C) Employment would increase and the real wage would decrease. D) Employment would decrease and the real wage would increase.
Citizens Bank confronts a reserve requirement of 20 percent and currently holds millions of dollars in excess reserves. If a depositor withdraws $35,000 . the excess reserves of the bank will
a. decline by $7,000. b. decline by $35,000. c. decline by $28,000. d. increase by $7,000.