Two resource inputs, capital and labor, are complementary and used in fixed proportions. An increase in the price of capital will:
A. Increase the demand for labor
B. Decrease the demand for labor
C. Decrease the quantity demanded for labor
D. Have no effect because the relationship is fixed
B. Decrease the demand for labor
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The length of time before policymakers realize they need to intervene in the economy is called the
A) recognition lag. B) implementation lag. C) impact lag. D) liquidity lag.
Residential investment plunged quite noticeably ________ the start of the 1973-1975 and 1981-1982 recessions, with the prospect that recent financial deregulation would make it ________ sensitive to future changes in monetary policy
A) after, more B) after, less C) before, more D) before, less
The ratio between the percentage change in the quantity demanded (Qd) or supplied (Qs) and the corresponding percentage change in price is called:
a. price elasticity. b. cost elasticity. c. demand elasticity. d. supply elasticity.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease