The substitution of machines for labor
A) does not reduce employment opportunities because labor is required to produce the machines.
B) is not likely to reduce employment opportunities because as many or more workers will usually be demanded to produce, service, and operate the machines.
C) will proceed more rapidly in a society the more rapidly the cost of hiring workers rises.
D) will reduce employment opportunities if increased competition associated with the introduction of machinery lowers product prices.
C
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Under some circumstances, trade could stifle the development of new industries and reduce global efficiency. All of the following describe conditions that could lead to that situation EXCEPT
A) an initial head start gives a scale advantage to already existing firms in one country. B) diseconomies of scale make it impossible for new firms to enter the market. C) a location has a better-developed linkage between suppliers and producers, giving it a cost advantage. D) a historical accident, such as the shifting of airplane production to the United States to avoid World War II bombings, causes firms in one location to have a competitive advantage.
What is the term used for the process by which an entrepreneur creates or recognizes a new and better product, acquires it, and brings it to market, making older substitutes obsolete?
A. Creative destruction B. Innovation C. The substitution effect D. Backward-bending innovation
Assume policy makers in a fixed exchange rate regime decide to peg the exchange rate at a higher level. This is called
A) a devaluation. B) a revaluation. C) a depreciation. D) an appreciation.
The purchase of $1 million of Treasury securities by the Federal Reserve, if there is no change in the quantity of currency, will cause reserves at banks to
A) increase by $1 million. B) increase by less than $1 million. C) decrease by $1 million. D) decrease by less than $1 million.