Suppose the following two events occur in the market for elementary school teachers:
a. Overcrowded schools and education budget cuts have discouraged young college students from pursuing careers in teaching.
b. With an increasing birth rate, the number of children entering the elementary school system is expected to increase significantly over the next ten years.
What is likely to happen to the equilibrium wage and quantity of teachers as a result of these two events?
A) The equilibrium wage rises and the effect on the equilibrium quantity of elementary school teachers is indeterminate.
B) The equilibrium quantity falls and the effect on the equilibrium wage of elementary school teachers is indeterminate.
C) The equilibrium quantity falls and the equilibrium wage of elementary school teachers rises.
D) The equilibrium quantity and the equilibrium wage of elementary school teachers fall.
Question 2
An increase in unemployment insurance payments would, in effect, ________ the amount of time spent searching for a job, which would increase ________ unemployment.
A) decrease; frictional B) increase; frictional C) increase; cyclical D) decrease; cyclical
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