Suppose that an increase in capital per hour worked from $15,000 to $20,000 increases real GDP per hour worked by $500
If capital per hour worked increases further to $25,000, by how much would you expect real GDP per hour worked to increase if there are diminishing returns?
A) by less than $500 B) by more than $500 but less than $5,000
C) by exactly $500 D) by more than $5,000 but less than $20,000
A
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An increase in the demand for green tea raises the price of green tea from $16 a pound to $20 a pound. As a result, quantity supplied increases by 30 percent. Using the midpoint formula, what is the value of the price elasticity of supply?
A) 1.35 B) 1.875 C) 2.22 D) 7.5
Refer to the following graph to answer the question:
Suppose price rises from $90 to $110. Using representative arrows, the quantity effect is a relatively ________ (short, long) arrow pointing ________ (upward, downward).
A. short; upward B. short; downward C. long; downward D. long; upward
In the above figure, assume the economy is in equilibrium at point d. Then the Fed decreases the money supply so that the new aggregate demand curve is AD1. In the long run, the new price level will be
A. 120. B. 130. C. 100. D. 110.
Why did some of the formerly Communist countries of Eastern Europe have inflation rates over 100%, while others didn't? Which factor was more important in explaining the differing inflation rates, real money demand or nominal money supply? Why did the countries with high inflation rates allow inflation to get so high?
What will be an ideal response?