We assume that when a firm hires additional workers, the marginal physical product of labor will
A) increase because more workers can always get more work done.
B) decrease because the new workers are likely to be less able than the previously hired ones.
C) decrease because each worker now has less capital and other resources to work with.
D) increase because large firms are more efficient.
Answer: C
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An economist claims that any point not on a production possibilities frontier cannot be best. What is his reasoning to support this?
A. A point inside the frontier implies that society is not facing up to the problem of scarcity. B. A point inside the frontier limits growth, and growth is always a goal worth pursuing. C. A point inside the frontier represents inflation, and inflation is a dangerous situation. D. A point inside the frontier results in fewer goods, and more is always better. E. A point inside the frontier is inefficient and represents wasted resources.
Labor force participation is a guaranteed ticket out of poverty
Indicate whether the statement is true or false
If the Federal Reserve buys $500 of government securities when the required reserve ratio is 50 percent, the maximum potential change in the money supply is a(n)
A. decrease by $1,000. B. increase by $1,000. C. decrease by $500. D. increase by $500.
If 100 percent of any change in income is spent, the multiplier will be:
A. equal to the MPC. B. 1. C. zero. D. infinitely large.