1. Marie is a college student looking for a job, but the avaliable jobs pay $9 per hour and she thinks it is worth working only if what she earns in an hour is enough to pay for a movie ticket (currently $10). Marie has a reservation wage of _______.
2. As a general rule, Marie will accept a job under which of the following circumstances? Check all that apply.
A. Nominal wages rise above her reservation wage, and she expects other prices to remain stable.
B. Movie ticket prices fall below the nominal wage.
C. Nominal wages rise above her reservation wage, and she expects other prices to rise proportionately.
D. The purchasing power of the wage rises to the value of a movie ticket.
3. Suppose falling aggregate demand causes firms to decrease production and hire fewer workers. Because firms need fewer employees, they can cut wages by 20% and still retain the labor they need. If Marie expects prices to remain the same, her new reservation wage will be ____.
4. If lots of people are like Marie and expect prices to remain the same, a decrease in aggregate demand that causes a fall in wages will ______ unemployment.
A. Increase
B. Decrease
C. Have no effect on