3) The reservation wage is: 3) A) the bribe that must be paid to a maitre d' when you want a table but did not call in advance. B) the wage that ensures a laid-off individual will wait for re-hire, rather than find another job. C) the wage that would make an individual indifferent between working or not working. D) the wage that an employer must pay workers to reduce turnover to a reasonable level. E) the wage offer that will end a labour-strike. 4) Efficiency wage theory suggests that: 4). A) unskilled workers will have a lower turnover rate than skilled workers. B) productivity might drop if the wage rate is too high. C) firms will be more resistant to wage increases as the labour market tightens. D) the government can only set tax rates so high before people will prefer not to work. E) workers will be paid more than their reservation wage. 5) A real appreciation will initially cause an increase in output when which of the following holds? A) Net exports are initially positive. B) Net exports are initially zero. C) Net exports are initially negative. D) the J-Curve effect E) the Marshall-Lerner condition 6) Suppose there is an increase in the budget deficit. In an open economy, which of the following will occur as a result of this increase in the budget deficit? 6) A) Investment increases. B) Public saving increases. C) Consumption increases. D) Private saving decreases. E) The trade balance worsens. 7) In the wage setting relation W-PeF(u,z), the variable z would NOT include: 7)_ A) unemployment benefits. B) the minimum wage. C) the amount of structural change in the economy. D) the firms' markup. E) the expected price level.