Equilibrium market prices for capital and labor are $10 and $8, respectively. Then, the economy experiences one or more supply shocks, so that the marginal product of capital is $9, and the marginal product of labor is $6
Assuming that the available quantities of capital and labor are fixed, which of the following is (are) likely to decrease as the economy approaches its new equilibrium? A) economic profits
B) real rental price of capital
C) total output
D) the quantity of capital in use
E) none of the above
B
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A the beginning of 2012, you pay $100 for a share of stock that then pays you a dividend of $1 at the beginning of 2013. If the stock price rises from $100 to $109 per share over the year, then you have earned an annual rate of return of
A) 5 percent. B) 1 percent. C) 9 percent. D) 4 percent. E) 10 percent.
In a simple Keynesian model, a decrease in income leads to a decrease in
A) consumption. B) investment. C) the price level. D) the money supply.
If the U.S. government increases its expenditures (without any change in taxes) and at the same time the Federal Reserve Bank increases the money supply, the AD curve would:
A. become steeper. B. shift to the left. C. become flatter. D. shift to the right.
Noise from a hard rock concert is an example of a situation in which
A. social costs that are not external costs. B. social costs are greater than private costs. C. social costs are less than private costs. D. social costs are equal to private costs.