Adam Smith identified all of the following as factors contributing to a nation's economic growth, except
a. size of the labor force
b. degree of labor specialization (or division of labor)
c. size of the capital stock
d. level of technology
e. the level of government spending
E
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If the Fed wants to lower the interest rate, it will
a. buy bonds and decrease the money supply. b. buy bonds and increase the money supply. c. sell bonds and decrease the money supply. d. sell bonds and increase the money supply. e. sell bonds and decrease money demand.
New Jersey raises its minimum wage while neighboring state Pennsylvania, does not. Economists compared the labor market in both states to draw conclusions about the effect of a minimum wage on employment and wages. This is an example of:
A. an economic principle. B. the economic decision rule. C. simulation economics. D. a natural experiment.
Refer to the diagram, in which Q f is the full-employment output. If the economy's present aggregate demand curve is AD 2 :
A. the most appropriate fiscal policy is an increase of government expenditures or a reduction of taxes.
B. the most appropriate fiscal policy is a reduction of government expenditures or an increase
of taxes.
C. government should undertake neither an expansionary nor a contractionary fiscal policy.
D. the economy is achieving its maximum possible output.
John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance he will earn $100,000 and a 50 percent chance he will earn $300,000. If he does expand, there is a 30 percent chance he will earn $100,000, a 30 percent chance he will earn $300,000 and a 40 percent chance he will earn $500,000. It will cost him $150,000 to expand. If John were to expand, which of the following is true?
A. John's expected earnings are $50,000 less than if he didn't expand. B. John can expect to earn $120,000 more by expanding, but that is less than the cost of expansion, $150,000. C. John can expect to earn $120,000 more by expanding and therefore made the most profitable decision. D. All of these statements are true.