Related to the Economics in Practice on p.221 [533]: According to a recent study by Simon Gilchrist, Fabio Natalucci, and Egon Zakrajsek, a one percentage point increase in the interest rate appropriate for a firm'?s borrowing will lead to a
A) drop in investment spending of more than one percentage point.
B) rise in investment spending of more than one percentage point.
C) drop in investment spending of less than one percentage point.
D) rise in investment spending of less than one percentage point.
Ans: A) drop in investment spending of more than one percentage point.
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If the existence of alternative opportunities makes people become less willing to work in poultry processing plants, then the real wage of unskilled workers in poultry processing plants is predicted to ________ and the employment of unskilled workers in poultry processing plants is predicted to ________.
A. increase; not change B. decrease; decrease C. increase; decrease D. increase; increase
According to the Taylor rule, when real GDP is at its potential and inflation is at its target rate of 2 percent, the Fed should:
A. carefully lower the federal funds rate in an attempt to stimulate noninflationary real GDP growth. B. raise the federal funds rate in an attempt to eliminate the remaining inflation. C. lower the federal funds rate to lower borrowing costs for the federal government. D. keep the federal funds rate at 4 percent.
In the long run, output is determined solely by the supply of capital and the supply of labor, not the price level
Indicate whether the statement is true or false
Profit-maximizing employment is the quantity of labor at which
A) marginal revenue product is equal to marginal factor cost. B) marginal revenue product is equal to product price. C) marginal factor cost is equal to marginal revenue. D) marginal factor product is equal to product price.