Which of the following is an implication of deflation:
(a) Savings are discouraged;
(b) Exports are more expensive;
(c) Reduction in business revenue;
(d) Excessive wage demands.
Ans: (c) Reduction in business revenue;
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The exchange rate of currencies between countries affects the prices of the goods purchased and sold between them
Indicate whether the statement is true or false
If marginal product is greater than average product, then
A) marginal product could either be increasing or decreasing. B) average product must be decreasing. C) marginal product must be decreasing. D) marginal product must be increasing.
The Cobb-Douglas production function is: Q = 1.4*L0.6*K0.5 . What would be the percentage change in output (%?Q) if labor grows by 3.0% and capital is cut by 5.0%? [HINT: %?Q = (EL * %?L) + (EK * %?K)]
a. %?Q = + 3.0% b. %?Q = + 5.0% c. %?Q = - 0.70% d. %?Q = - 2.50% e. %?Q = - 5.0%
When deciding whether to buy a second car, marginal analysis indicates that the purchaser should compare the:
a. benefits expected from two cars with the cost of both. b. additional benefits expected from a second car with the cost of the two cars. c. dollar cost of the two cars with the potential income that the cars will generate. d. additional benefits of the second car with the additional cost of the second car.