Labor demand is more elastic
A. the greater is labor's share in total costs.
B. the greater is the elasticity of substitution between labor and capital.
C. the greater is the supply elasticity of capital.
D. the greater is the elasticity of demand for the firm's output.
E. All of the statements are correct.
Answer: E
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Arguably the most damaging economic consequence of inflation is:
A. high prices. B. the uncertainty it can create. C. the adjustment of sticky wages. D. the erosion of value of real assets.
If the income effect counteracts the substitution effect, we know that the good in question is a(n)
a. complementary good. b. inferior good. c. luxury good. d. normal good.
Exhibit 14A-1 Aggregate demand and supply model
Given the shift of the aggregate demand curve from AD1 to AD2 in Exhibit 10A-1, the real GDP and price level (CPI) in long-run equilibrium will be:
A. $8 billion and 150. B. $12 billion and 200. C. $8 billion and 250. D. $8 billion and 200.
A nation's technological gains have increased labor productivity and, as a result, the average number of hours worked each week has been falling. How do Gross Domestic Product (GDP) calculations account for this shortening of the average workweek?
A. Gains in leisure time are dollar-valued and included in real per capita Gross Domestic Product (GDP) gains. B. Gains in leisure time are not included in Gross Domestic Product (GDP), so any increase in real per capita Gross Domestic Product (GDP) will understate the nation's actual economic growth. C. Neither real Gross Domestic Product (GDP) nor per capita real Gross Domestic Product (GDP) includes the increase in leisure time that results, so the nation's actual economic growth will be overstated. D. Real Gross Domestic Product (GDP) does not factor in an increase in leisure time but per capita real Gross Domestic Product (GDP) does.