Prices provide the rationing function best when
A) prices are flexible.
B) prices are inflexible.
C) they are used in conjunction with queuing.
D) price controls are in place and ration coupons are used too.
A
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If the government raises income taxes, then the labor
A) supply curve shifts rightward. B) demand curve shifts leftward. C) demand curve shifts rightward. D) supply curve shifts leftward. E) Both answers B and D are correct.
At Olive’s Oranges customers may pick oranges from a 100-tree orchard at the price of 15¢ per orange. Olive’s orchard currently produces 8,000 oranges annually. Olive estimates that installing a new irrigation system would increase her annual yield by 200 oranges, beginning next year. The irrigation system requires an immediate cost of $600.
(i) Calculate the marginal product of capital for the irrigation system. Express your answer as a percentage of the cost of the capital. (ii) Suppose the interest rate is 4%. Should Olive invest in the irrigation system? Why or why not? (iii) Repeat part ii for an interest rate of 8%.
There has been a decrease in investment. As a result, real GDP will ________ in the short run, and ________ in the long run
A) decrease; decrease further B) increase; decrease to its initial value C) increase; increase further D) decrease; increase to its initial level
According to purchasing-power parity, if over the course of a year the price level in the U.S. rises more than in Japan, then which of the following falls?
a. the U.S. real exchange rate, but not the U.S. nominal exchange rate b. the U.S. nominal exchange rate, but not the U.S. real exchange rate c. the U.S. nominal exchange rate and the U.S. real exchange rate d. neither the real exchange rate nor the nominal exchange rate