The value of the marginal product of new capital increases when the:
A. productivity of new capital increases.
B. the price of the good the firm produces decreases.
C. real interest rate increases.
D. price of new capital goods increases.
Answer: A
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Technological change that makes workers more productive should increase the demand for labor
Indicate whether the statement is true or false
A demand curve is described as perfectly inelastic if
a. the same quantity is purchased regardless of price. b. the same price is charged regardless of quantity sold. c. neither price nor quantity demanded ever change. d. only quantity demanded can change.
According to Friedman and Phelps, the unemployment rate is above the natural rate when actual inflation
a. is greater than expected inflation. b. is less than expected inflation. c. equals expected inflation. d. low whether its greater than or less than expected.
For this question, assume that a country experiences a permanent reduction in its saving rate. Which of the following will occur as a result of this reduction in the saving rate?
A) a permanently slower growth rate of output B) no permanent effect on the level of output per capita C) a permanently lower level of output per worker D) both A and B E) both B and C