Chapter 4 - Labour and Financial Markets

Question 1

6 factors that shift labour demand

Answer 1

1. Demand for output
2. Education/training
3. Technology
4. Number of companies
5. Regulations
6. Price and availability

Question 2

3 factors that shift labour supply

Answer 2

1. Number of workers
2. Education required
3. Government policies

Question 3

Derived demand

Answer 3

Demand for labour based on the demand for the good or service being produced

Question 4

Interest rate

Answer 4

Rate of return. Price of borrowing money, or money received for depositing money

Question 5

Intertemporal decision making

Answer 5

Whether someone in the financial market wants to consume goods now or in the future

Question 6

Usury law

Answer 6

Impose an upper limit on the interest rate that lenders can charge

Question 7

Why can price controls be counterproductive?

Answer 7

They can cause shortages and surpluses. They can cause higher rates for lower quality products, or lower rates for higher quality products. They can also hide information about true scarcity