When the unemployment rate is ________ the natural unemployment rate, real GDP is ________ potential GDP
A) below; above
B) above; the same as
C) the same as; below
D) the same as; above
E) above; above
A
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A firm is employing capital and labor such that the marginal product of capital is 30 and the marginal product of labor is 10
If the price of a unit of capital is $50 and the price of a unit of labor is $10, is the firm minimizing its costs? If not, can you recommend a change for the firm to make in its relative amounts of labor and capital used? Explain.
A manager of a clothing firm is deciding whether to add another factory in addition to one already in production. The manager would compare
a. The total benefits gained from the two factories to the total costs of running the two factories. b. The incremental benefit expected from the second factory to the total costs of running the two factories. c. The incremental benefit expected from the second factory to the cost of the second factory d. The total benefits gained from the two factories to the incremental costs of running the two factories.
The increase in unemployment associated with a recession is called
The consequences of the Volcker disinflation demonstrated that when Volcker announced his intention to reduce inflation quickly, on average the public thought
a. he would try to fool them by raising inflation to decrease unemployment. b. inflation would be unchanged. c. inflation would fall but not by as much or as quickly as Volcker claimed. d. inflation would fall even further than Volcker was willing to admit.