Suppose that a more efficient way to produce a good is discovered, thus lowering production costs for the good. This will cause
A. a movement up along the current supply curve.
B. a movement down along the current supply curve.
C. a rightward shift of the supply curve.
D. a leftward shift of the supply curve.
Answer: C
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Answer the following statement(s) true (T) or false (F)
1. The term price as used in microeconomics refers to the absolute price of a commodity. 2. The relative price of bread in terms of wine is the amount of wine which can be traded in exchange for a loaf of bread. 3. When relative prices are measured in terms of dollars, the term dollar refers to currency. 4. When absolute prices are measured in terms of dollars, the term dollar refers to currency. 5. Relative prices cannot fall when absolute prices are rising.
Given the production function Y = A and fixed values for the saving rate and depreciation, if productivity is growing at an average rate of three percent, and the labor input grows at two percent, there is a unique growth rate of capital that is
sustainable. That is, if the growth rate of capital is either higher or lower than this steady-state value, then it must eventually change, even if nothing else in the economy changes. Calculate this steady-state growth rate of capital, and explain why it alone is a sustainable rate. [Hint: Use the fact that the growth rates of output and capital per worker are 43% higher than the growth rate of productivity.]
Assume that the central bank sells government securities in the open market. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and current international transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. The real risk-free interest rate falls and the current international transactions balance becomes more negative (or less positive). b. The real risk-free interest rate rises and the current international transactions balance becomes more negative (or less positive). c. The real risk-free interest rate and the current international transactions balance remain the same. d. The real risk-free interest rate rises and the current international transactions balance remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Which of the following is NOT an example of private investment expenditure?
A. new plants and equipment added during the year B. new houses built during the year C. using credit cards to purchase durable and nondurable goods D. increases in inventories on goods produced during the year