The input-substitution effect of an increase in the wage comes about because higher wages:
A. increase production costs, and final good prices will rise, reducing the quantity demanded of the product.
B. increase production costs, and final good prices will rise, increasing the quantity demanded of the product.
C. make labor less expensive as an input, leading firms to switch to labor as an input.
D. make labor more expensive as an input, leading firms to switch to other inputs.
Answer: D
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Based on Table 9.1, the balance on the financial account is
A) +100. B) +200. C) 0. D) -100. E) -200.
Assuming perfect capital mobility and a fixed exchange rate, then an increase in government spending shifts
a. the IS schedule only. b. both the IS and LM schedules to the left. c. both the IS and LM schedules to the right. d. the LM schedule to the left and the IS schedule to the right.
The inefficiency for collective consumption goods stems from the fact that _____
a. the total cost of the good is too high b. the marginal cost of the good is zero c. the total cost of the good is zero d. the good cannot be priced because it is too easy to steal
Which of the following would be efficient from an economic perspective?
a. Reducing the crime rate to zero b. Changing speed limits and safety requirements so that there were no traffic fatalities or injuries each year. c. Completely eliminating the emission of greenhouse gases d. None of the above would be efficient from an economic perspective.