If the price of capital declines, the consequent output effect would be:
A. greater, the more elastic the demand for the product.
B. greater, the less elastic the demand for the product.
C. negative.
D. of consequence only if capital and labor are used in fixed proportions.
Answer: A
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Deflation occurs when
A) there is a sustained increase in the price level. B) there is a one-time increase in the price level. C) there is a decrease in the expected rate of inflation. D) there is a decline in the price level.
In the aftermath of the last financial crisis, critics of monetary policy argued that it was ineffective. The Federal Reserve had moved interest rates to historic lows without a significant stimulus effect. Some economists wondered if the United States was:
a) undergoing simultaneous increases in aggregate demand and supply. b) undergoing offsetting changes in aggregate demand and supply. c) facing hyperinflation. d) in a liquidity trap.
Which statement is true?
A. Aid to other countries is the fourth largest spending item in the federal budget. B. Nearly half of federal government spending goes for direct payments to individuals. C. Over half of all federal tax receipts comes from the personal income tax. D. Defense spending per capita is less than most other industrial countries.
Over the last three decades the "college premium" has ________ because of ________.
A. increased; technological advances B. decreased; technological advances C. increased; racial and gender discrimination D. decreased; laws that prohibit discrimination