Review Ch. 3, 6-8

Which would most likely be a MICROECONOMIC question?

Should I go to business school or take a job?

French fries and hamburgers are complements in consumption. Suppose the cost of the ingredients used to make hamburgers rises, so that the price of a hamburger rises. Then the equilibrium relative price of french fries _____ and the equilibrium quantity _____.

falls; decreases

Since 1960 in the United States, the rate of inflation has:

fluctuated.

In an open economy:

there is trade in goods, services, and/or assets with other countries.

If the cost of the market basket in the base year is $1,000 and the cost of the market basket in 2013 is $1,080, the price index for 2013 is 80.

False

Spending on medical care is the largest portion of the consumer price index.

False

(Figure: The Effect of a Minimum Wage) Look at the figure The Effect of a Minimum Wage. Suppose the labor market is in equilibrium at E when the government imposes a minimum wage of WF. The quantity of labor supplied may_____, resulting in structural unemployment.

increase to QS

The natural rate of unemployment:

is composed of structural and frictional unemployment.