Suppose two goods (x and y) are being produced efficiently and that the production of x is always more labor intensive than the production of y. Production depends only on two factors (capital and labor); these may be smoothly substituted for each other. The total quantities of these inputs are fixed. An increase in the production of x and a decrease in the production of y will:
a. increase the capital-labor ratio in each firm.
b. decrease the capital-labor ratio in each firm.
c. leave the capital-labor ratio for each firm unchanged.
d. increase the capital-labor ratio in y production and decrease the capital-labor ratio in x production.
a
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Esther wants to buy a used car from her neighbor, who quotes a price of $18,000. Esther negotiates with her neighbor and offers him $16,500 for the car. This is an example of ________
A) bilateral bargaining B) collective bargaining C) arbitration D) speculation
Some people see the government as being more heavily involved in taking sides than in serving the common interest.
Answer the following statement true (T) or false (F)
Which of the following can happen?
a. Prices are rising and the inflation rate is negative but rising. b. Prices are falling and the inflation rate is positive and falling. c. Prices are falling and the inflation rate is positive and rising. d. Prices are rising and the inflation rate is positive but falling. e. Prices are rising and the inflation rate is negative and falling.
Answer the following statements true (T) or false (F)
1. Under the gold standard, a nation experiencing chronic trade deficits had to increase its money supply while reducing its holdings of gold. 2. After World War II, most nations adopted some type of fixed or controlled exchange rate system. 3. Under a fixed or controlled exchange rate system, if the United States wanted to increase the value of the dollar, it could buy foreign currencies with dollars. 4. Since World War II, the importance of gold in international exchange has increased. 5. The Bretton Woods system included the idea of fixed exchange rates.