All else equal, if the demand for capital decreases and the supply of capital does not change, the equilibrium real rental cost of capital will ________ and the equilibrium quantity of capital will ________
A) increase; increase
B) decrease; not change
C) decrease; decrease
D) not change; decrease
B
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Describe and explain the real business cycle theory
What will be an ideal response?
According to real business cycle theory, business cycles
a. can be eliminated with appropriate monetary and fiscal policy. b. are natural and efficient reactions to changes in productivity. c. do not occur. d. occur infrequently. e. none of the above.
Refer to the graph shown. If a competitive industry producing hamburgers is taken over by a pure monopoly firm that maximizes profit:
A. price will remain at $4 but output will fall by 100. B. price will rise to $6 and output will fall by 100. C. price will remain at $6 but output will fall by 100. D. output will remain at 100 but price will rise to $6.
Answer the following questions true (T) or false (F)
1. It is not possible to have a comparative advantage in producing a good or service without having an absolute advantage. 2. If Abigail can make more candles in one day than Pierre, then Abigail has an absolute advantage in making candles. 3. If a country produces only two goods, it is possible to have an absolute advantage in the production of both goods.