For This Question,assume That the Economy Is Initially Operating at the Natural

question 19

Multiple Choice

For this question,assume that the economy is initially operating at the natural level of output.An increase in unemployment benefits will cause

• A)an increase in the real wage in the medium run.
• B)a reduction in the real wage in the medium run.
• C)no change in the real wage in the medium run.
• D)ambiguous effects on the real wage in the medium run.

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Definitions:

Substitutes

Products or services that can be used in place of another to satisfy consumer needs or desires.

Skimming Strategy

A pricing approach where a high price is set for a new product to maximize profits from customers willing to pay high prices before lowering the price over time.

Penetration Pricing

A pricing strategy where a product is introduced to the market at a very low price to stimulate demand and gain market share quickly.

Market Prices

The current prices at which goods or services are bought and sold in a marketplace.