Suppose Country Y produces only corn and clothing using only two inputs-land and labor. Production of corn requires an intensive use of land whereas clothing is a labor-intensive good. If the price of corn increases by 15 percent and the price of clothing remains constant, the Stolper-Samuelson theorem predicts that in the long run
A. the wage rate will increase by more than 15 percent.
B. the rental rate of land will increase by 15 percent.
C. the rental rate of land will increase by more than 15 percent.
D. the wage rate will remain unchanged.
Answer: C
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Suppose a perfectly competitive firm's minimum average variable cost is $3 when it produces 50. If the price is $2 and the firm's marginal cost is $2, the firm should
A) continue to produce, but produce more than 50. B) continue to produce 50. C) continue to produce, but produce less than 50. D) shut down. E) continue to operate, but to determine the amount of production needs more information than is given.
Which of the following relationships is CORRECT?
A) Net Investment = Gross Investment + Depreciation B) Consumption expenditure = Net Investment - Depreciation C) Gross Investment = Net Investment + Depreciation D) Depreciation = Gross Investment - Consumption expenditure
The chain-weighted output index method ________
A) is used to calculate the value of nominal GDP B) values the quantities produced in a year at the prices of the base year C) shows that real GDP increases every year D) uses the prices of two adjacent years to calculate the real GDP growth rate
Bankers' concerns regarding the optimal mix of excess reserves, secondary reserves, borrowings from the Fed, and borrowings from other banks to deal with deposit outflows is an example of
A) liability management. B) liquidity management. C) managing interest rate risk. D) managing credit risk.