Suppose that input prices respond very slowly to output price. This will
A. increase the value of the multiplier.
B. have no effect on the value of the multiplier.
C. reduce the value of the multiplier.
D. either increase or decrease the value of the multiplier depending on the value of the MPC.
Answer: A
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The base year is the year
A) in which prices are unstable. B) in which prices are lowest. C) in which prices are highest. D) that serves as a reference point or benchmark. E) in which nominal output is largest.
The payroll tax appears to be a proportional tax. In reality, it is
A. highly progressive. B. actually proportional. C. highly regressive. D. regressive on low-income persons and progressive on high-income persons.
If Jane can produce 3 pairs of shoes per hour, while Bob can produce 2, then ________ has a(n) ________ advantage in producing shoes.
A. Bob; absolute B. Jane; absolute C. Bob; comparative D. Jane; comparative
Refer to the following graph. The price of capital (r) is $20.
What combination of labor (L) and capital (K) can produce 5,000 units of output at lowest cost?
A. 60K, 20L B. 110K, 10L C. 42K, 52L D. 10K, 110L E. 90K, 60L