Why is frictional unemployment considered to be productive?
A. Firms do not hire a worker until they find the most educated worker.
B. The demand for highly skilled workers exceeds the supply of highly skilled workers when there is frictional unemployment.
C. Frictional unemployment leads to a decrease in the unemployment rate.
D. There are more potential workers seeking jobs than there are jobs for workers when there is frictional unemployment.
E. Search activities of workers and firms resulting in frictional unemployment improve the allocation of resources.
Answer: E
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What is the largest component of GPDI?
A) residential fixed investment B) nonresidential fixed investment C) inventory investment D) consumer durables
Suppose that MPL = 100 and MPK = 80. If W = 25 and R = 20, then a firm:
A. is producing its output at the lowest possible cost. B. could reduce costs by employing more labor and less capital. C. could reduce costs by employing more capital and less labor. D. could minimize costs by employing more of both inputs.
Answer the following questions true (T) or false (F)
1. An increase in the price of inputs will cause the supply curve for a product to shift to the right. 2. All else equal, as the price of a product falls, the quantity supplied increases. 3. A decrease in the number of firms in a market will cause supply to increase.
When real GDP equals potential GDP, the quantity theory of money says that an increase in the quantity of money brings an equal percentage
A) decrease in real GDP. B) decrease in velocity. C) decrease in the price level. D) increase in the price level. E) increase in real GDP.