Suppose the production function for a certain device is q = L + K. If a labor-saving technical change has occurred, which of the following could be the new production function?
A) q = L + 5K
B) q = 5 ? (L + K)
C) q = 5L + K
D) All of the above are possible.
A
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Assume the economy is in a recession and the Federal government decides to cut personal income tax rates. All else equal, the cut in tax rates should
A) increase consumption expenditures and cause real GDP to increase relative to potential GDP. B) increase the nominal interest rate and cause potential GDP to increase relative to real GDP. C) decrease the real interest rate and decrease expectations of inflation. D) increase the target interest rate and cause real GDP to fall relative to potential GDP.
Walter is just learning how to ski. He states that every time he goes skiing, he has more fun than the last time. This means his marginal utility of skiing is
a. increasing b. constant c. decreasing d. zero e. negative
The opportunity cost of any decision is the forgone value of the next best alternative that is not chosen
a. True b. False Indicate whether the statement is true or false
If there were no usury law the interest rate would be _______%.
A. under 18
B. 18
C. 22
D. 28