This Table Shows the Labor Supply as a Function of Wages

question 62

Multiple Choice

This table shows the labor supply as a function of wages and the values of marginal product as a function of the number of laborers

-If the actual wage is $5,there will be

• A) downward pressure on the wage because of the excess supply of labor.
• B) no tendency toward change because $5 is the equilibrium wage.
• C) upward pressure on the wage because the labor supply function is horizontal.
• D) upward pressure on the wage because of the excess demand for labor.
• E) a reduction in the supply of labor.

Understand the mechanisms through which the Federal Reserve controls the money supply.

Recognize the historical context and purposes behind the establishment of the Federal Reserve System.

Understand the different tools of monetary policy, including open market operations, the discount rate, and reserve requirements.

Identify the effects of monetary policy decisions on financial institutions and markets.

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