The returns to scale in the production function Y = K0.5 L0.5 are:
A. decreasing.
B. constant.
C. increasing.
D. subject to wide fluctuations.
Ans: B. constant.
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Wages and salaries are examples of:
A. consumption. B. labor income. C. profits. D. capital income.
If actual inflation is greater than expected inflation
A) the Phillips curve is a vertical line. B) real wages fall. C) real wages rise. D) the unemployment rate rises.
Suppose the nominal interest rate is 7 percent annually, and you deposit $1,000. Inflation in the economy throughout the year is 7 percent. At the end of the year, you have earned:
A. an increase in your purchasing power. B. no increase in your purchasing power. C. no increase in your savings. D. a decrease in your purchasing power.
Explain why bond prices and interest rates are inversely related