Consider a hypothetical economy in which only computers and shoes are produced. If two resources are being used, labor and capital, then any increase in immigration in the long run:
a. will decrease wages in the shoe industry.
b. will decrease wages in the computer industry.
c. will increase wages in the shoe industry.
d. will keep wages constant because marginal products do not change.
Answer: d. will keep wages constant because marginal products do not change.
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When economists say entrepreneurs have a comparative advantage in arbitrage activity, they are saying
A) entrepreneurs are efficient at selling their products below cost. B) entrepreneurs are efficient at selling their products at cost. C) entrepreneurs are efficient at discovering opportunities to buy goods low and sell them at higher prices. D) entrepreneurs are efficient at resolving disputes of interest over titles to scarce property rights.
Assume that the lost output due to tax distortions is proportional to the square of the tax rate
If the average cost of the distortion created by taxes is currently $1000, and the tax rate is increased from 40% to 50%, the average cost of the distortion created by taxes will increase to A) $383.33. B) $450.00. C) $640. D) $1562.50.
The money-creation multiplier is affected by the
A) public's demand for currency as a proportion of demand deposits. B) bank reserve-holding ratio as a proportion of demand deposits. C) rediscount rate applied to loans from the Fed to banks. D) Both A and B are correct.
U.S. Treasury bonds
A) carry no risk of default and are therefore not risky investments. B) have constant yields to maturity and are therefore not risky investments. C) have constant coupon rates and are therefore not risky investments. D) are subject to fluctuations in their market prices and are therefore risky investments.