William and Harry each own a rock quarry, both of which are located in different parts of Atlanta . They have each been in business exactly the same length of time. Although their product seems identical, and neither advertises, William earns much larger profits. Can you use the theory of location rent to explain this outcome?
William is probably closer to the market for rock and concrete than Harry is, and so earns a location rent
for his superior location.
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
The "monetary policy transmission mechanism" connects
A. individual income tax rates to aggregate supply. B. open market purchases to the Fed's balance sheet. C. short-term interest rates to aggregate demand. D. individual income tax rates to aggregate demand.
Which of the following is NOT a means of acquiring product and process innovations?
A. Mass production of the existing product B. Reverse engineering C. Hiring employees of innovating firms D. Independent research and development
If a lender faces a potential loan applicant pool made up of equal amounts of low risks and high risks, will charging an average interest rate provide the average (expected) return? Explain.
What will be an ideal response?