The wage paid to labor should increase when:
a. the capital/labor ratio increases.
b. the capital/labor ratio decreases.
c. a country's labor force increases.
d. a country's capital stock decreases.
Ans: a. the capital/labor ratio increases.
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
Refer to Figure 7-3. Without the quota, the domestic price of peanuts equals the world price which is $2.00 per pound. What is the quantity of peanuts demanded by domestic consumers in the absence of a quota?
A) 10 million pounds B) 28 million pounds C) 30 million pounds D) 40 million pounds
Which of the following is the largest component of M1?
A) traveler's checks B) savings deposits C) checking deposits D) currency
The above figure shows the marginal benefit from pollution for two firms. If each firm receives a marketable permit to produce 25 units of pollution, which one of the following is most likely to happen?
A) Firm B will sell some pollution rights to firm A. B) Firm A will sell some pollution rights to firm B. C) Firm A will produce all 50 units of pollution. D) Both firms will produce 25 units of pollution.