The average product of labor is
A. the percentage change in output divided by the percentage change in labor.
B. the change in output that results from an increase of labor by one unit.
C. the output produced by a worker of average quality.
D. total output divided by total labor.
Answer: D
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The mechanism that normally coordinates what goes on in an economy is the
A) government. B) Federal Reserve. C) price system. D) stock market.
The managers of government bureaucracies have an incentive to _____
a. maximize the size of their budgets b. minimize the size of their staff c. maximize the profits from their bureaus d. minimize rent-seeking
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real GDP and current international transactions in the context of the Three-Sector-Model?
a. Real GDP falls, and current international transactions rises. b. Real GDP rises, and current international transactions remain the same. c. Real GDP rises, and current international transactions become more negative (or less positive). d. Real GDP rises, and current international transactions become more positive (or less negative). e. Real GDP falls, and current international transactions become more negative (or less positive).
The recessionary gap is the
A. amount of unemployment compensation required during a recession. B. budget deficit encountered during a recession. C. amount of government spending needed to end a recession. D. distance between the equilibrium level of output and the full employment level of output.