If the economy is near full capacity, the effect of a negative aggregate demand shock is to
A. increase the level of aggregate demand.
B. cause the price level to fall.
C. increase the level of employment.
D. increase the firm's cost of producing at every level of output.
Answer: B
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The above figure shows the market for 2 bedroom town homes in San Diego. If a rent ceiling is set at $1,000 per month, what is true?
A) The quantity of town homes demanded decreases to 100,000. B) Black market rents might be as high as $1,300 per month. C) The quantity of town homes supplied increases to 250,000. D) More town homes are rented after the rent ceiling that before. E) The quantity demanded of town homes is less than the quantity supplied.
If a firm has a capital stock of $50,000 and employs 200 workers, its capital-labor ratio is
a. $1/250 b. 4 percent c. 250 percent d. $10,000,000 e. $250
Which of the following correctly describes the marginal rate of return on capital?
a. The marginal rate of return equals the marginal product of capital multiplied by the marginal revenue product of capital. b. The marginal resource cost of capital expressed as a percentage of its marginal revenue product. c. The marginal revenue product of capital expressed as a percentage of its marginal cost. d. The marginal rate of return equals the marginal product of capital added to the marginal revenue product of capital.
If the price of pizzas has risen from $4 to $5 at the same time that the price of an hour of spinning class has risen from $20 to $30, then
A. pizzas have become relatively more expensive. B. spinning classes have become relatively more expensive. C. the relative prices of pizzas and spinning classes have remained constant. D. workers’ real income must have decreased.