Suppose that the mayor of Pittsburgh decides to levy a tax on firms in the city. It will use the additional tax revenue to construct a museum. The new museum would not increase the city's demand for labor; instead, the museum is viewed as a positive amenity for the city's workers. What does the standard model of the urban labor market predict will happen to the city's wages and employment? A. Wages will unambiguously increase. B. Wages will unambiguously decrease. C. Employment will unambiguously increase. D. Employment will unambiguously decrease. E. (A) and (C) F. (A) and (D) G. (B) and (C) H. (B) and (D)

Suppose that the mayor of Pittsburgh decides to levy a tax on firms in the city. It will use the additional tax revenue to construct a museum. The new museum would not increase the city's demand for labor; instead, the museum is viewed as a positive amenity for the city's workers. What does the standard model of the urban labor market predict will happen to the city's wages and employment? A. Wages will unambiguously increase. B. Wages will unambiguously decrease. C. Employment will unambiguously increase. D. Employment will unambiguously decrease. E. (A) and (C) F. (A) and (D) G. (B) and (C) H. (B) and (D)

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

ChapterST4: Keynes And Hayek: Contrasting Views On Sound Economics And The Role Of Government

Section: Chapter Questions

Problem 4CQ

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