Answer the following statement(s) true (T) or false (F)
1. The slope of the budget line depends on the wage rate and the amount of human capital the worker has accumulated.
2. An increase in a worker's marginal productivity can cause an increase in the worker's non-labor income.
3. Human capital tends to increase over the course of a person's life.
4. Because people work more efficiently in periods of high productivity, they tend to work fewer hours because it does not take as long to complete assignments.
5. Unlike regular indifference curve analysis, that involving the labor consumption trade-off only includes income effects (not substitution effects) because labor only generates income.
1. False
2. True
3. True
4. False
5. False
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According to Robert Solow, the production function should be written as
A) Y = F(K, L, A). B) Y = F(K, L). C) Y = F(A, L). D) Y = F(K, A).
Which of the following $1,000 face-value securities has the lowest yield to maturity?
A) a 5 percent coupon bond selling for $1,000 B) a 10 percent coupon bond selling for $1,000 C) a 15 percent coupon bond selling for $1,000 D) a 15 percent coupon bond selling for $900
The break-even investment line becomes flatter when the depreciation growth rate ________ or the labor force growth rate ________
A) increases; decreases B) increases; increases C) decreases; increases D) decreases; decreases
Suppose a Canadian investor buys a one-year U.S. government bond that pays 7 percent interest. If the U.S. dollar appreciates 4 percent against the Canadian dollar during the year, what must be the yield on a comparable Canadian government bond for interest rate parity to hold?
a. 3 percent b. 4 percent c. 7 percent d. 10 percent e. 11 percent