Economic models must be tested with data to see if they are correct.
Answer the following statement true (T) or false (F)
True
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If average labor productivity decreases while population and the number of employed workers remain constant, then total output:
A. increases. B. decreases. C. may increase or decrease. D. remains constant.
Suppose that the equilibrium nominal interest rate is 5 percent and the equilibrium quantity of money is $1 trillion. At any interest rate below 5 percent,
A) the supply of money will decrease. B) there will be a surplus of money and bond prices will increase. C) the interest rate will fall and bond prices will fall. D) there will be a surplus of money and bond prices will fall. E) the interest rate will rise and bond prices will fall.
Assume (other things constant) that the Fed increases the money supply. The mechanism through which aggregate demand increases is, according to interest-rate-based transmission mechanism, summarized as follows:
A) the money supply increases ? there is a drop in money balances held ? interest rates increase ? planned investment spending decreases ? aggregate demand increases. B) increase in money supply ? increase in money balances held ? decrease in interest rates ? decrease in planned investment spending ? increase in aggregate demand. C) increase in money supply ? decrease in money balances held ? decrease in interest rates ? increase in planned investment spending ? increase in aggregate demand. D) increase in money supply ? decrease in interest rates ? increase in planned investment spending ? increase in aggregate demand.
The slope of an isoquant is
A. MPL / MPK. B. -?K/?L. C. the marginal rate of technical substitution . D. both a and b E. all of the above