Which of the following will most likely occur during the expansionary phase of a business cycle?
What will be an ideal response?
Real GDP rises, and unemployment falls.
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Let the production function be q=ALaKb. The function exhibits constant returns to scale if
A) a + b = 1. B) a + b > 1. C) a + b < 1. D) Cannot be determined with the information given.
According to liquidity preference theory, the opportunity cost of holding money is
a. the interest rate on bonds. b. the inflation rate. c. the cost of converting bonds to a medium of exchange. d. the difference between the inflation rate and the interest rate on bonds.
Which of the following is most likely to be a major source of growth in per capita GDP?
A. a high investment / GDP ratio B. a high rate of inflation C. rapid population growth D. rapid growth in the money supply
In the employment of any resource, a firm should
A. hire each input unit that adds more to revenue than it adds to costs. B. equate marginal revenue product with the cost of the additional resource. C. hire until MRP equals MFC. D. All of these are correct.