Laws that cap the rate lenders may charge on loans are called usury laws.
Missing Word
usury
Usury laws put a legal maximum on what lenders may charge, which makes them price ceilings in the market for credit. A cap below the equilibrium rate leads to a shortage of credit, while a cap above it has no effect.
Category: Price Controls
Question 2
Immigration, the arrival of people from other countries who join the workforce, increases labor supply.
Missing Word
Immigration
Immigration raises the number of people available to work, which is one of the factors that shift labor supply. More workers at every wage shifts the labor supply curve to the right.
Category: Labor Supply Shifters
Question 3
In economics, a technology that makes a group of workers more productive and raises demand for them is called a complement to their labor.
Missing Word
complement
A complement is something used together with labor that makes it more valuable to employers. Information technology has acted this way for many high-skill workers, raising their wages and employment.
Category: Labor Demand Shifters
Question 4
People choosing where to put their money compare an investment's rate of return with its risk, the chance that it will lose value or fail to pay back.
Missing Word
risk
Risk is the possibility that an investment will pay less than expected or lose value. When an investment becomes riskier, people supply less money to it unless it offers a higher rate of return.
Category: Financial Capital Basics
Question 5
When a law caps the rate on loans below the market level, people want to borrow more than lenders offer, and the gap between the two amounts is a shortage.
Missing Word
shortage
A shortage, or excess demand, occurs when the amount demanded exceeds the amount supplied at the controlled price. With credit rationed, some people who want loans or credit cards are turned down.
Category: Price Controls
Question 6
Students taking out loans and firms financing new factories are borrowers, the demanders in the market for financial capital.
Missing Word
borrowers
Borrowers demand financial capital and pay a rate of return for its use. They want to borrow less when the interest rate rises, which gives the demand curve its downward slope.
Category: Financial Capital Basics
Question 7
When many older workers in an occupation retire at once, the labor supply curve for that occupation shifts to the left.
Missing Word
left
Retirements reduce the number of workers available at every wage, so labor supply decreases, which is drawn as a leftward shift. The model predicts a higher wage and lower employment if demand is unchanged.
Category: Labor Supply Shifters
Question 8
A surge in demand for restaurant meals shifts the demand curve for chefs to the right, because labor demand depends on demand for what workers produce.
Missing Word
right
Labor demand is a derived demand, so more demand for meals means restaurants want more chefs at every wage. An increase in demand is drawn as a rightward shift, which raises both the wage and employment.
Category: Labor Demand Shifters
Question 9
When a city pays its workers above the market rate, more people apply than the city will hire, and the difference is a labor surplus.
Missing Word
surplus
A surplus, or excess supply, occurs when the quantity supplied exceeds the quantity demanded at a price held above equilibrium. In a labor market, it means more people want those jobs than there are openings.
Category: Price Controls
Question 10
When households put aside a larger share of their income through saving, the supply of financial capital increases.
Missing Word
saving
Saving is income that is not spent on consumption, and it is the source of the funds lent to borrowers. More saving shifts the supply of financial capital to the right, lowering the interest rate.
Category: Financial Market Equilibrium
Question 11
Home buyers usually pay for a house with a mortgage, a long-term loan secured by the property being bought.
Missing Word
mortgage
A mortgage is a loan used to buy real estate, repaid over many years, with the home pledged as security so the lender can claim it if payments stop. Mortgages are one of the main ways households demand financial capital.
Category: Financial Capital Basics
Question 12
A person who takes out a loan pays interest, the price of using someone else's money for a period of time.
Missing Word
interest
Interest is the payment a borrower makes to a lender for the use of funds, usually stated as a percentage rate. In the market for financial capital, the interest rate acts as the price.
Category: Financial Capital Basics
Question 13
A rise in workers' productivity, the amount each one produces in an hour, increases employers' demand for their labor.
Missing Word
productivity
Productivity is output per worker or per hour of work. When each worker produces more, hiring that worker is worth more to a firm, so the labor demand curve shifts to the right; better education and training raise demand for labor this way.
Category: Labor Demand Shifters
Question 14
Many professionals are paid a salary, a fixed amount per year that does not depend on the number of hours they work.
Missing Word
salary
A salary is pay set as a fixed amount for a year or other period rather than by the hour. Along with hourly pay, it is the price of labor shown on the vertical axis of a labor market diagram.
Category: Labor Market Basics
Question 15
Hourly workers earn a wage, which is the price of their labor for each hour worked.
Missing Word
wage
A wage is payment for labor calculated per hour of work. In the demand and supply model of labor, the wage is the price that adjusts to balance the number of workers employers want with the number willing to work.
Category: Labor Market Basics