Capital deepening causes ________ in the demand for labor.
A. an increase
B. a decrease
C. no change
D. either an increase or decrease
Answer: A
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Most economists agree that modest inflation is desirable over zero inflation because:
A. it helps firms to more easily adjust real wages. B. it allows a margin of error for those deciding on the money supply. C. it allows the Fed to more easily engage in expansionary monetary policy. D. All of these statements are true.
Reserve requirements are changed infrequently because
A. Banks can determine the amount of reserves they wish to hold regardless of the reserve requirement B. Banks cannot usually meet their reserve requirements so the Fed does not monitor it C. Banks set long-term policy decisions, loan decisions, and deposit decisions based on the reserve requirement
A recessionary gap is usually closed in the long run by a(n) _____
Fill in the blank(s) with the appropriate word(s).
An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction assumes that:
A. there are many goods that are substitutes for bicycles. B. there are many goods that are complementary to bicycles. C. there are few goods that are substitutes for bicycles. D. bicycles are normal goods.