In an economy with flexible exchange rates, which measure(s) are successful at reducing unemployment in the context of the Three-Sector-Model?
a. Decrease government spending.
b. Raise the discount rate for banks.
c. Raise tax rates.
d. Reduce reserve requirements.
e. All of the above
.D
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If disposable income falls by $50 billion and consumption falls by $40 billion, then the slope of the consumption function is
A) 1.20. B) 0.80. C) 0.70. D) 0.10.
An export industry is said to exhibit increasing returns to scale when
(a) a large-scale organization has significant competitive advantages over small-scale activities. (b) labor utilization increases by 50 percent but export output production increases by only 20 percent. (c) its small-scale business activity has significant comparative advantages over large-scale productions. (d) use of capital increases by 10 percent leads to an increase in export production by 10 percent.
What is not true when thinking of the firm's objective as a cost-minimization problem rather than as a profit-maximization problem?
A. The slope at any point on any isoquant reveals the marginal rate of technical substitution. B. The firm chooses to employ either labor or capital, depending on which factor is cheaper. C. The price of the output good does not enter the decision of how much labor or capital to employ once the total amount of output to produce has been determined. D. The firm chooses a particular level of output to produce. E. The firm will choose labor and capital inputs so that the marginal productivity of labor relative to the marginal productivity of capital equals the price of labor relative to the price of capital.
Critics of the tax cut of 2001 made all of the following arguments EXCEPT
A. It would push up the federal budget deficit. B. Most of the benefits would go to the rich. C. The last time massive tax cuts were enacted in the 1980s, budget deficits increased dramatically. D. The tax cut will discourage people from working.