According to David Ricardo's explanation of land rent, what happens when the demand for land increases?
A. Revenues to owners of land increase but economic rent declines.
B. The amount of economic rent stays constant, constrained by a perfectly inelastic supply curve.
C. The supply curve shifts to the right just enough to keep the price per acre constant.
D. Both revenues to owners of land and economic rent increase.
Answer: D
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A) increased; decreased; increased B) did not change; increased; increased C) increased; decreased; did not change D) decreased; increased; increased E) increased; did not change; increased
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Which of the following is a major deficiency of fiscal policy as a stabilization tool?
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A. rises; decreases B. does not change; does not change C. falls; decreases D. rises; increases E. falls; increases