Changes in production functions are associated with changes in
A. the levels of costs.
B. the level of output.
C. technology.
D. demand.
Answer: C
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When the economy is at full employment __________ interest rates are __________ by an expansionary monetary policy if inflationary expectations are generated
A) real; decreased B) real; not changed C) nominal; decreased D) nominal; not changed
If wages drop below the market equilibrium level in a competitive labor market:
A. firms will demand more labor than workers are willing to supply. B. firms will be able to offer lower wages and still fill all the jobs they have. C. unemployment will persist until the wage increases. D. All of these statements are true.
The growth rate of potential GDP is the sum of the growth rates of
A. labor force and population. B. labor force and labor productivity. C. labor force and capital stock. D. labor productivity and capital stock.
The rational expectations hypothesis indicates that a monetary policy designed to alter real Gross Domestic Product (GDP) will fail unless
A. changes in the money supply are completely anticipated. B. there are unanticipated changes in the money supply. C. labor unions have long-term contracts. D. wages and prices are flexible.