The per-worker production function in the Solow model assumes
A) constant returns to scale and increasing marginal productivity of capital.
B) constant returns to scale and diminishing marginal productivity of capital.
C) increasing returns to scale and diminishing marginal productivity of capital.
D) decreasing returns to scale and diminishing marginal productivity of capital.
B
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Which of the following correctly ranks the amounts from largest to smallest?
A. total output, output per person, average labor productivity B. output per person, total output, average labor productivity C. total output, average labor productivity, output per person D. average labor productivity, output per person, total output
How were Smith, Ricardo, Malthus and Marx, in their own ways, pessimistic about long-term development?
What will be an ideal response?
Under a flexible-price monetary approach to the exchange rate
A) when the domestic money supply falls, the price level would eventually fall, increasing the interest rate. B) when the domestic money supply falls, the price level would fall right away, causing a reduction in the interest rate. C) when the domestic money supply falls, the price level would fall right away, causing an increase in the interest rate. D) when the domestic money supply falls, the price level would eventually fall, keeping the interest rate constant. E) when the domestic money supply falls, the price level would fall right away, keeping the interest rate constant.
Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. What is the opportunity cost of producing coffee in Chile?
a. Half a pound of sugar b. Two-fifth of a pound of sugar c. 2 pounds of sugar d. One-third of a pound of sugar e. 4 pounds of sugar