If a business makes the determination that an investment makes sense at the current interest rate, but before they can act, the interest rates fall
A. they will go ahead with the investment because interest rates have nothing to do with whether an investment makes sense.
B. it will only make the situation better, so they will clearly make the investment.
C. it will cause them to not make the investment regardless of the decrease.
D. they will have to recalculate whether it still makes sense.
Answer: B
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Refer to the below graph of the market for low-skilled labor. Sd is the supply of domestic resident workers, and St is the total supply of labor including undocumented workers. Suppose the government cuts off the flow of illegal immigrants to this market. By how much will the employment of legal residents be increased?
A. 15M
B. 120M
C. 135M
D. 22M
The best example of a "frictionally unemployed" worker is one who
A. is in the process of voluntarily switching jobs. B. is discouraged and not actively seeking work. C. is laid off during a recessionary period in the economy. D. reduces productivity by causing friction in a business.
Does this production function, q = 10L0.5K0.3, experience increasing, decreasing or constant returns to scale?
A) Decreasing because a 100% increase in inputs increases outputs by 80%. B) Increasing because an 80% increase in inputs increases outputs by 100%. C) Decreasing because 0.5 + 0.3 < 1. D) A and C.
Supply-side economics calls for:
a. lower taxes on businesses and individuals. b. regulatory reforms to increase productivity. c. government subsidies to promote technological advance. d. All of these.