Why does unemployment tend to change when the level of output changes?
A. Persons wish to buy things, and if output falls, people need to work less to earn the income to buy the smaller output.
B. Labor is an input, and if output falls, employers need fewer workers to make it, so the employment falls.
C. As output rises, more people are more interested in buying goods and services, and so these people work more to obtain the income needed to buy things.
D. Persons face the option of buying or working, so that when they do more of one, the other necessarily falls.
E. When companies replace workers with machines, output rises and people take more vacation time prior to returning to work.
Answer: B
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Which of the following is a key characteristic of the long-run competitive equilibrium that distinguishes it from the short-run competitive equilibrium?
a. Free entry to reduce short-run profits, or free exit to reduce short-run losses. b. Economic profits are positive, but cannot be negative. c. Marginal revenue is greater than marginal cost. d. Average revenue is less than average cost.
Crowding out can best be defined as:
a. private investment increases growth rates and decreases deficits. b. restrictive monetary policy raises interest rates and decreases investment. c. government deficits increase interest rates and decrease investment. d. consumption spending increases interest rates and decreases investment.
Figure 6.5 shows the short-run and long-run effects of an increase in demand of an industry. The market is in equilibrium at point A, where 100 identical firms produce 6 units of a product per hour. If the market demand curve shifts to the right, what has happened to an individual firm's output level at point B?
A. Each firm produces two more units per hour. B. Each firm produces relatively smaller level of output as more firms enter the market. C. Each firm will produce the same level of output. D. None of these
Answer the following statements true (T) or false (F)
1) A nation that realizes a 3 percent increase in its output per person is experiencing modern economic growth. 2) Output per person has grown steadily since the beginning of the Roman Empire. 3) China's GDP per person in 2011 was about one-third of U.S. GDP per person in the same year. 4) Economists refer to purchases of stocks and bonds as "investment."