One reason that firms hire labor at the point where w = MPN is
A. if w < MPN, the cost (w) of hiring additional workers equals the benefits (MPN) of hiring them, so they have the right number of workers.
B. if w < MPN, the cost (w) of hiring additional workers exceeds the benefits (MPN) of hiring them, so they should hire fewer workers.
C. if w > MPN, the cost (w) of hiring additional workers is less than the benefits (MPN) of hiring them, so they should hire more workers.
D. if w > MPN, the cost (w) of hiring additional workers exceeds the benefits (MPN) of hiring them, so they should hire fewer workers.
Answer: D
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Potential GDP is estimated to grow at a rate of 3.2% in the United States. Actual GDP in the U.S
A) always grows at a slower rate than potential GDP. B) is the same as potential GDP if all firms in the economy were working at capacity. C) always grows at the same rate as potential GDP. D) always grows at a faster rate than potential GDP.
Refer to above figure. Albania refused to engage in international trade for ideological reasons. To maximize its economic welfare it would choose to produce at which point in the diagram above? Suppose the PA/PB at point a was equal to 1
Given this information, in which good (A or B) does Albania enjoy a comparative advantage? Now that the Cold War is over, Albania is interested in obtaining economic welfare gains from trade. The relevant international relative price is PA/PB = 2. Albania would therefore choose to produce at which point (a, b, or c)? Given this additional information, in which good does Albania enjoy a comparative advantage?
The main argument against Fed independence is that
A) in a democracy elected officials should make public policy. B) monetary and fiscal policy would be easier to coordinate if the Fed were not independent. C) the Fed has proven irresponsible on many occasions. D) congressional control was tried during the 1960s and it worked well.
On a straight-line production possibilities frontier, which of the following is true?
a. The problem of scarcity does not exist. b. Resources are imperfect substitutes. c. Opportunity costs are constant. d. Technology is rapidly expanding. e. Some resources are not being used efficiently.