Long-term increases in productivity that have increased the demand for labor, and raised real wages, have resulted primarily from ________ and ________.
A. a modernized capital stock; an increased labor supply
B. a modernized capital stock; skill-biased technological change
C. technological progress; a modernized capital stock
D. technological progress; an increased labor supply
Answer: C
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China is a large open economy with an extraordinarily high saving rate
If, as seems likely, there is a decrease in desired saving in the coming years, what effects should we expect to see on China's trade balance (net capital flow), domestic real interest rate, and actual levels of saving and investment?
A rise in the real interest rate r
a. creates income and substitution effects that reduce C0. b. creates income effects that reduce C0, substitution effects that increase C0. c. creates income effects that increase C0, substitution effects that reduce C0. d. creates income and substitution effects that increase C0.
A leading game-console manufacturer slashes the price of its flagship product by ten percent. Holding other things such as income and preferences constant, which of the following is the most likely group behavior prediction? a. Price reduction will have no impact on purchase patterns
b. Price reduction will be associated with a reduction in quality; thereby reducing sales. c. More game consoles will be sold at lower prices. d. Group behavior cannot be predicted.
Given a nominal interest rate of 6 percent, in which of the following cases would you earn the lowest after-tax real rate of interest?
a. Inflation is 4 percent; the tax rate is 5 percent. b. Inflation is 3 percent; the tax rate is 20 percent. c. Inflation is 2 percent; the tax rate is 30 percent. d. The after-tax real interest rate is the same for all of the above.