How will an increase in the level of human capital, ceteris paribus, affect an economy's production possibilities curve?
A. Shift the curve inward.
B. Result in a movement from inside the curve to a point on the curve.
C. Result in a movement along the curve.
D. Shift the curve outward.
Answer: D
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If the population of a country increases, while GDP remaining constant, then ________
A) income per capita will remain unchanged B) trade deficit will decrease C) gross national product will increase D) income per capita will decrease
A speculator who feels strongly that short rates will be rising over the next few years might want to be a __________ payer in a swap contract; if she is wrong there is __________ downside risk
A) fixed-rate; no B) fixed-rate; considerable C) floating-rate; no D) floating-rate; considerable
A look at macroeconomic data across countries reveals that when economies experience recessions, unemployment rates rise, but wages fall very little, if at all. Which of the following is most likely to support this observation?
a. Wages are determined by the interaction of the forces of labor demand and supply. b. The demand for labor is derived demand and hence does not fall during recessions. c. The labor market usually exhibits perfect competition. d. The labor supply curve becomes perfectly inelastic during recessions. e. Long term labor contracts make the wage rates sticky downwards.
Since World War II, international exchange rates have been
a. fixed all the time. b. floating all the time. c. fixed most of the time until the early 1970's, and floating most of the time since then. d. determined by the use of exchange controls.