Author Question: Assuming a 5-percent decrease in both the nominal (money) wage and 5-percent increase in the price ... (Read 51 times)

nummyann · **on:** Jun 30, 2018

Assuming a 5-percent decrease in both the nominal (money) wage and 5-percent increase in the price level in the classical model, then

a. both the quantity supplied and demanded of labor will increase.
b. the quantity supplied of labor will increase and the quantity demanded of labor will decrease.
c. both the quantity supplied and demanded of labor will decrease.
d. the quantity of labor supplied and demanded would remain constant.

Question 2

If the consumption function is C = 120 +_.8(Y-T) in the basic Keynesian model, then in the government spending multiplier is:

a. 5.
b. 4.
c. 1.25.
d. .8