Suppose the production function is given by Q = 3K + 4L. What is the marginal product of capital when 5 units of capital and 10 units of labor are employed?
A. 11
B. 3
C. 4
D. 45
Answer: B
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Everything else held constant, in the market for reserves, when the federal funds rate is 3%, increasing the interest rate paid on excess reserves from 1% to 2%
A) lowers the federal funds rate. B) raises the federal funds rate. C) has no effect on the federal funds rate. D) has an indeterminate effect on the federal funds rate.
In the two-period model, the nature of the asymmetric information is that
A) only the bank knows who the bad borrowers are. B) only borrowers know whether they are bad or not. C) only borrowers know the value of their collateral. D) only banks can value the collateral.
When an economy experiences a one-time increase in productivity, there is an immediate increase in ________
A) the saving rate B) the capital-labor ratio C) the depreciation rate D) consumption per worker
Which of the following statements is true about the trends in the flow of international trade witnessed in India since its independence?
a. Trade liberalization was unable to boost India's economy in the first few decades of independence. b. Indian software exports now reflect an annual growth rate of an impressive 55 percent. c. The opening of trade and modern telecommunications allowed India's production set to expand and gain comparative advantage in software. d. Trade has enabled Indian engineers to command higher wages than most other nations specializing in software.