Question

1. The effect of a shift in the supply of labor on the equilibrium wage rate...

1. The effect of a shift in the supply of labor on the equilibrium wage rate will be the greatest if the wage elasticity of demand for labor is?

A. -0.1

B. -0.5

C. -1

D. -5

2. What does an appreciation of the pound-dollar exchange rate mean?

A. There are more pounds in circulation domestically

B. A pound has more purchasing power domestically

C. A pound is worth more in dollars

D. A pound is worth more against all other currencies

3. Under what circumstance is a currency most likely to appreciate?

A. Domestic interest rates fall

B. Domestic prices rise faster than those internationally

C. Demand for exports rise

D. Local incomes rise

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Homework Answers

Answer #1

1)If demand for labour is more wage inelastic, then the effect of a shift in the supply of labour on the equilibrium wage rate will be the greatest.

Hence, if the wage elasticity of demand for labour is –0.1, it means that the demand for labour is highly Wage inelastic. In this case, effect of shift in the supply of labour on the equilibrium wage rate will be greatest.

Hence, option A is correct i.e, –0.1

2) an appreciation of the pound dollar exchange rate means a pound is worth more in dollars.

Hence, options C is correct.

3) if the demand for exports rises, the demand for domestic currency also increases as the foreigners demand it more to pay for the goods and services they buy. This leads to to the appreciation of domestic currency.

Hence, option C is correct.

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