Explain what is meant when it is said that the demand for labor is a derived demand.
What will be an ideal response?
The demand for labor is derived from the demand for the good or service that labor produces. It is the downward-sloping portion of the marginal revenue product curve of labor, which is the product of marginal physical product of labor and the price of the output. If the price of the output increases, the demand curve for labor in turn will shift outward.
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In order to reduce inflationary pressure on the economy, what fiscal policy can the government use?
A) increase government expenditure on goods and services B) cut interest rates C) increase the quantity of money D) raise taxes E) cut taxes
Changes in reserve requirements directly and immediately affect
A) the monetary base. B) banks' holdings of securities. C) the Fed's holdings of foreign exchange. D) the money multiplier.
Net domestic product equals:
A. consumption + investment + government purchases + net exports - net foreign factor income. B. consumption + investment + government purchases + net exports - change in inventories. C. consumption + investment + government purchases + net exports - depreciation. D. consumption + investment + government purchases + net exports - profits.
If the stock market booms, then
a. aggregate demand increases, which the Fed could offset by increasing the money supply. b. aggregate supply increases, which the Fed could offset by increasing the money supply. c. aggregate demand increases, which the Fed could offset by decreasing the money supply. d. aggregate supply increases, which the Fed could offset by decreasing the money supply.