Author Question: When the labor market is in equilibrium, A) there is full employment, which means that real GDP ... (Read 77 times)

lbcchick · **on:** Jun 30, 2018

When the labor market is in equilibrium,

A) there is full employment, which means that real GDP equals potential GDP.
B) there is full employment but real GDP might be greater than, less than, or equal to potential GDP.
C) the real wage rate rises to allow real GDP to equal potential GDP.
D) there is excess labor supplied, which keeps real GDP less than potential GDP.
E) the real wage rate falls to equal the nominal wage rate because real GDP is greater than potential GDP.

Question 2

In the circular flow model, rent, wages, interest, and profit paid flow from ________ through ________ to ________.

A) firms; goods markets; firms
B) households; factor markets; firms
C) households; goods markets; firms as payment for goods
D) firms; factor markets; households
E) firms; goods markets; households