Suppose That the Market for Labor Is Initially in Equilibrium

question 518

Multiple Choice

Suppose that the market for labor is initially in equilibrium. Suppose that workers' tastes change so that they choose to retire at age 55 rather than age 67. Then the equilibrium wage

• A)and the equilibrium quantity of labor will rise.
• B)and the equilibrium quantity of labor will fall.
• C)will rise, and the equilibrium quantity of labor will fall.
• D)will fall, and the equilibrium quantity of labor will rise.

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Definitions:

Real Exchange Rate

The price of one country's currency in terms of another currency, adjusted for inflation, which reflects the purchasing power between the two countries.

Surplus

The situation in which the quantity of a good or service supplied is more than the quantity demanded.

Import Quotas

Restrictions set by a government on the quantity of goods that can be imported into a country.

Net Exports

The value of a country's total exports minus its total imports, representing the net effect of foreign trade on an economy.