You own a business that answers telephone calls for physicians after their offices close. You have an incentive to substitute capital for labor if the
A. price of labor decreases.
B. price of capital decreases.
C. marginal product of labor increases.
D. price of capital increases.
Answer: B
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In the ISLM framework, monetary policy has the greatest impact on equilibrium income when
A) money demand = money supply. B) money demand is infinitely elastic. C) the interest rate is low. D) the investment function is highly interest-sensitive.
Less than 200,000 poor families would no longer be counted as poor if each family had the same income and one person less
Indicate whether the statement is true or false
If the reserve requirement is 10 percent, and banks keep no excess reserves, an increase in an initial $300 into the banking system will cause an increase in total money of:
A. $3,000. B. $30,000. C. $300. D. $30.
In the IS-LM Model, assuming downward sloping IS curve and upward sloping LM curve; increase in consumers' wealth is going to
A) cause a movement along the IS curve. B) cause a rightward shift of the IS curve. C) cause a leftward shift of the LM curve. D) cause a rightward shift of the LM curve.