A firm practices input substitution when it
A. retrains Joe the welder as a painter and Pat the painter as a welder.
B. buys extra machines for its workers to use.
C. allows fixed cost to become variable.
D. replaces unskilled labor with automated machinery.
Answer: D
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What is measured on the vertical axis of the aggregate demand/aggregate supply model?
A) real Gross Domestic Product (GDP) B) nominal income C) the price level D) the interest rate
A payday loan company has decided to open several new locations in the city. To decide where to open these locations it hires consultants and must decide how to pay them. To align incentives, it should to pay the consultants
a. Per store opened b. A percentage of the profit earned per new store c. A fixed contract amount d. All of the above
If the U.S. dollar appreciates in the foreign exchange market,
a. American goods will become more expensive for foreign buyers and foreign goods will be cheaper for Americans b. American goods will become less expensive for foreign buyers and foreign goods will be more expensive for Americans c. American goods will become more expensive for foreign buyers and foreign goods will be more expensive for Americans d. American goods will become cheaper for foreign buyers and foreign goods will be cheaper for Americans e. neither the price of U.S. exports nor the price of U.S. imports will change
Careetha has just taken a fixed-rate loan and agreed to pay a nominal interest rate of 6 percent. If the inflation rate during the first year of the loan was 2 percent, her real interest rate that first year was
a. 6 percent b. 8 percent c. 4 percent d. 12 percent e. impossible to calculate without additional information