Investment in human capital
A. shifts the aggregate production function downward.
B. shifts the LRAS to the left.
C. shifts the aggregate production function upward.
D. decreases the aggregate demand for labor.
Ans: C. shifts the aggregate production function upward.
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An indifference curve is a line showing
A. combinations of goods that can be produced if all resources are fully employed. B. all combinations of two commodities that are equally desirable to the consumer. C. all combinations of goods over which the consumer has no choice. D. how decisions are made in a nonmarket economy.
A natural monopoly results when a firm has
a. a license b. a patent c. official approval to produce a product d. decreasing average costs over the range of market demand e. exclusive use of a natural resource
Since classical economists believe that both V and Q are constants for an economy in short-run equilibrium, the equation of exchange becomes a theory in which:
a. the quantity of money explains prices. b. the quantity of money explains velocity. c. the quantity of money explains real GDP. d. changes in M cause changes in V. e. prices are never flexible
The U.S. should
A. not engage in trade with Italy but produce beer and pizzas domestically.
B. import both beer and pizzas from Italy.
C. specialize in the production of beer and import pizzas from Italy.
D. specialize in the production of pizza and import beer from Italy.