What is production technology?
What will be an ideal response?
Production technology is the quantitative relationship between inputs and outputs. This relationship can be expressed using a production function.
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In Figure 1 below if the economy were at Y2 then we would expect there to be:
A. a reduction in inventories.
B. an increase in inventories.
C. no change in inventories.
D. an increase in consumption spending.
Economists feel that taxing nominal capital gains imposes costs on the economy due to
a. increased consumption. b. reduced consumption. c. increased investment. d. reduced investment.
When the economy is at full employment and inflation is present, the government could create a surplus budget by cutting its own spending and raising taxes. The Fed would be expected to:
A. reduce the required reserve ratio, increase the discount rate, and buy securities on the open market. B. reduce the required reserve ratio, reduce the discount rate, and sell securities on the open market. C. reduce the required reserve ratio, reduce the discount rate, and buy securities on the open market. D. increase the required reserve ratio, increase the discount rate, and sell securities on the open market.
Answer the following questions true (T) or false (F)
1. Ceteris paribus, a real depreciation of the dollar will decrease net exports in the United States. 2. The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change. 3. Chips and salsa are complements. If the price of salsa decreases, the demand for chips will increase.