Refer to Figure 11-12. The movement from isoquant T to isoquant U depicts
A) an increase in the cost of production.
B) an increase in output.
C) an increase in labor usage holding capital and output constant.
D) a change in preferences with regards to input usage.
B
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How is a compensated demand curve different from an ordinary demand curve? Why must the law of demand always hold for one while it may be violated for the other?
What will be an ideal response?
An import is a product
A) produced in and purchased by residents of the home country. B) produced in the home country and sold in another country. C) produced in and sold to the residents of a foreign country. D) produced in a foreign country and purchased by the residents of the home country.
After trade opens, the short run impact on the income of the variable factor will be
A) a decrease. B) an increase. C) zero. D) indeterminate, depending on the consumption pattern of the owners of the variable factor. E) indeterminate, depending on the productivity of the variable factor.
Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and reserve-related (central bank) transactions become more negative (or less positive). b. The GDP Price Index and reserve-related (central bank) transactions remain the same. c. The GDP Price Index falls, and reserve-related (central bank) transactions remain the same. d. The GDP Price Index rises, and reserve-related (central bank) transactions become more positive (or less negative). e. The GDP Price Index rises, and reserve-related (central bank) transactions remain the same.