Suppose production in an economy is represented by a Cobb-Douglas production function
If each worker in the economy becomes more productive while the number of workers in the economy, the capital stock and the state of technology remains unchanged, ________.
A) the inflation rate in the economy will decrease
B) the exchange value of its currency will increase in the foreign exchange market
C) the income per capita of the economy will decrease
D) the gross domestic product of the economy will increase
D
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Which of the following is NOT an assumption of the classical system?
A) Wages and prices are inflexible. B) Pure competition exists. C) There is no money illusion. D) People are motivated by self interest.
Demand-pull inflation starts with a shift of the
A) potential GDP line leftward. B) AD curve leftward. C) AS curve leftward. D) AS curve rightward. E) AD curve rightward.
X-inefficiency refers to the situation in which:
A) highly competitive firms have less incentive to minimize their costs of production than other firms because the highly competitive firms have almost no chance to earn above-average profits. B) firms are unable to minimize their costs of production because there is no potential for input substitution. C) firms that use labor-intensive production methods tend to be less efficient than firms that use capital-intensive production methods. D) firms with market power have less incentive to minimize their costs of production than more competitive firms.
The average total cost of a firm is calculated by: a. dividing total cost of the firm by the quantity of output produced
b. multiplying the total cost of the firm by the quantity of output produced. c. dividing the total cost of the firm by the price of its output. d. multiplying the total cost of the firm by the price of its output.