In the Solow model, if saving per worker initially exceeds investment per worker,
A. the economy will experience inflation.
B. the capital-labor ratio will increase.
C. saving per worker will decline.
D. investment per worker will decline.
Answer: B
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Net investment
A) equals gross investment plus depreciation. B) is the only measure of investment used to calculate GDP. C) equals gross investment minus depreciation. D) is equivalent to the existing capital stock in the economy.
Which of the following is NOT a necessary condition for long-run equilibrium under perfect competition?
A) No firm has an incentive to enter the market. B) No firm has an incentive to exit the market. C) Prices are relatively low. D) Each firm earns zero economic profit. E) Each firm is maximizing profit.
Suppose a new technology allows firms to substitute mechanical tomato pickers for farm laborers. As a result, the demand curve for farm laborers will
A) become less elastic. B) become more elastic. C) shift to the right. D) not be affected.
The official unemployment rate is:
a. the number of unemployed people divided by the number of employed people. b. the number of unemployed people divided by the total size of the population. c. the number of unemployed people divided by the size of the non-institutionalized population. d. the number of unemployed people divided by the size of the labor force. e. the number of unemployed people divided by the number of people aged 16 or under.