Lumicia Corporation spent $2 million to purchase a new technology that would lower its manufacturing cost by 15 percent. This will enable the company to sell its output cheaper than most other competitors. This improvement in the technology of production is most likely to result in a(n):
a. upward shift of its aggregate production function
b. downward shift of its aggregate production function.
c. rightward movement along its aggregate production function.
d. leftward movement along its aggregate production function.
a
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A central concept of New Keynesian macroeconomics is that in setting prices and wages, self-interested firms and workers are acting
A) irrationally, since their self-interest is badly damaged by the ensuing business cycles. B) irrationally, since this imposes business cycles on everyone not part of their arrangements. C) rationally, since they do not bear a fully offsetting cost of business cycles. D) rationally, since the total welfare loss of business cycles must be small enough to justify the price and wage setting.
In the simple Keynesian model, equilibrium exists when
a. actual investment equals realized investment. b. exports equal imports. c. savings is equal to government spending plus desired investment minus taxes. d. national product is equal to consumption minus desired investment plus government spending. e. None of the above
An increase in the saving rate results in a higher steady state ________
A) growth rate of capital B) growth rate of output per worker C) level of consumption per worker D) level of capital per worker
Suppose residents of Toadhop live on the Quabache River, a river prone to flooding. Suppose there are 1000 (type A) people who value flood control more than the 1000 (type B) people. Type A Demand QD = 100 ? P Type B Demand QD = 50 ? P Where Q measures the quality of flood control. If the price of a unit of flood control is $100,000 and the citizens of Toadhop gather for a townhall meeting to
find the socially optimal level of flood control, and they are successful, how much will each type B individual contribute in total? a. 1875 b. 1500 c. 875 d. 625