Page 1 of 14 Test Bank Macroeconomics: Theory and Policy Chapter 14: The Keynesian Model UCD Students: Ignore the yellow highlighted questions B. Modjtahedi Question 1 Which of the following Keynesian assumptions indicate the possibility that a free-market capitalist system could generate unemployment? A. Wage and price rigidity. B. Wage and price flexibility. C. Constant velocity of circulation. D. Volatile business investment. E. None of the above. Question 2 Which of the following is a directreason for nominal wage rigidity? Question 3 Which of the following is a directreason for nominal wage rigidity? Question 4 Why do employers and workers enter into long-term labor contracts? Question 5 The insider-outsider argument indicates that? A. Workers who are unemployed and are outside the firm cause wages to fall in a recession. B. Firms offer wages to hire outsider workers that are lower than wages paid to comparable inside workers. C. Outside workers sit at negotiation tables with employers to receive wage concessions. D. Wages are negotiated between employers and workers who are employed by the firms. Workers who are unemployed have no say in wage determination. E. None of the above.
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