Offer a skeptical perspective on the long-term economics of the recent increase in trend rate productivity.
What will be an ideal response?
The doubts that the skeptics raise are whether the increases in productivity and economic growth can be sustained over a long period of time. Skeptics question whether the current trend is a short-term economic expansion rather than a long-term structural change in the economy. Economic boom can also create shortages and contribute to inflationary pressure in the economy if the productivity increases do not keep pace with the expanding demands on the economy. The excessive demand can increase the general level of prices. The response of the Federal Reserve to increasing inflationary pressure is to raise the target for short-term interest rates. This action can reduce investment spending and slow economic growth.
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To find the opportunity cost of producing one more unit of any product while on the production possibilities frontier requires
A) subtracting the change in the product whose production increased from the change in the product whose production decreased. B) dividing the amount of the product forgone by the amount of the product gained. C) setting the amounts of the two products equal to each other. D) setting the change in one product equal to the change in the other product. E) None of these describes how to find opportunity cost.
Which one of the following is NOT a retaliation strategy that firms would apply to one that cheated on a price-fixing scheme by selling at a price below the agreed-upon fixed price?
A. All other firms sell at the same low price as the cheating firm. B. All other firms sell at a price that ensures zero economic profit for all firms. C. Each period, all other firms sell at the price picked by the cheater in the previous period. D. All other firms would reduce their output.
The amount that must be paid to an individual to get them to invest in the industry is
A) a normal rate of return. B) the explicit costs. C) reinvestment. D) financial capital.
Comparative advantage refers to the ability to produce better quality goods than a competitor.
Answer the following statement true (T) or false (F)