The Market for Engineers Is Initially in Equilibrium

question 41

Multiple Choice

The market for engineers is initially in equilibrium.The demand curve for engineers shifts up.Assume the naive cobweb model holds such that in the first period,the labor supply is fixed,in the next period,wages are fixed,and so on.In period three,how will the wage rate compare to the new long run level?

• A) The wage rate will be below its long run level.
• B) The wage rate will equal its long run level.
• C) The wage rate will be above its long run level.
• D) uncertain (need more information)

---

Definitions:

Commercial Banks

Commercial banks are financial institutions that accept deposits, offer checking account services, and make loans to individuals and businesses.

Reserve Requirements

Regulations set by central banks determining the minimum amount of reserves that must be held by a commercial bank.

Checkable Deposit Liabilities

These are bank account deposits that are immediately available to make payments and transfers, typically seen in checking accounts.

Excess Reserves

Funds that banks hold over and above the required minimum reserves set by the central bank, available for lending or investment.