A firm is operating such that the marginal product of labor is 48 and the marginal product of capital is 12. The firm is minimizing its costs only if
A. since capital is more productive than labor, the firm must be minimizing cost.
B. the rental rate is one fourth the wage.
C. the wage is one fourth the rental rate.
D. Given this information the firm can't be minimizing cost under any circumstances.
Answer: B
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The main policy designer of the Federal Reserve system is the
A) 12 district banks. B) President and Congress. C) Federal Open Market Committee. D) Council of Economic Advisors.
If additional units of a good are produced at an increasing opportunity cost, the production possibilities frontier would be bowed outward (concave)
Indicate whether the statement is true or false
Ignoring taxes when making redistributive decisions has no impact on equity.
A. True B. False C. Uncertain
Expansionary fiscal policy is incapable of solving the underlying problem of a negative real shock. Which of the following problems also makes it difficult to use fiscal policy to combat a negative real shock?
A. The problem of timeliness of fiscal policy B. The problem of crowding out of private spending C. All of these problems make it difficult. D. The problem of targeting fiscal policy