Explain why wage rates might rise at Joe's Quik-Print Shop if Joe replaces his aging copy machines with state-of-the-art copy machines.
What will be an ideal response?
The improvement in technology will boost the productivity of Joe's employees. Their MRP will rise, and since Joe's labor demand curve is the MRP curve, he will be willing and able to hire more workers and pay higher wage rates.
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What helps to explain the remarkable 7.3% growth rate in South Korea between 1960 and 2011?
A) The education of South Korean women B) A radical reduction in foreign imports and a maximization of South Korean exports C) Huge foreign aid from the World Bank D) All of the above. E) None of the above.
One reason why the government may not choose to close a recessionary gap by raising both taxes and spending and thereby keeping the budget balanced is because it
a. leaves undone the problem of unemployment b. can create inflation c. may involve raising taxes too high for political comfort d. eventually leads to deficit budgets e. does not impact on aggregate demand which is where the problem lies
Which of the following factors substantially reduces the effectiveness of discretionary changes in tax rates or government expenditures as a stabilization tool?
a. Even though computer models have enhanced our forecasting ability, policy makers at the Federal Reserve have been reluctant to utilize information supplied by the models. b. When fiscal policy is altered, the Fed generally shifts monetary policy in a manner that offsets the impact of the fiscal action. c. Changes in government expenditures and taxes are always offset by equal changes in private spending. d. Since it takes time for fiscal policy to work and since the future is difficult to forecast, it is difficult to time fiscal policy changes correctly.
How long is the long run?
A. However long it would take a firm to have at least one variable cost B. However long it would take a firm to vary all of its costs C. A defined, set period of time, usually a year D. None of these defines the long run.