When the Fed makes an open market ________, the target short-term nominal interest rate will increase, which will ________ GDP
A) purchase; increase
B) purchase; decrease
C) sale; increase
D) sale; decrease
D
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A new law applied to a competitive market that requires laid off workers be paid a large severance payment will
A) not generate a deadweight loss. B) increase total welfare. C) increase consumer surplus in the market. D) decrease consumer surplus in the market.
The growth rate of productivity is the most important determinant of material well-being in the short run
a. True b. False Indicate whether the statement is true or false
Technological innovation is not subject to diminishing marginal returns because: a. it can be used by workers across the economy at a low marginal cost
b. it can result in a rightward shift of the aggregate production function of an economy. c. it can result in a rightward shift of the production possibilities frontier of an economy. d. it can be used by skilled as well as unskilled workers across the economy.
An increase in demand will induce entry by firms in the long run.
Answer the following statement true (T) or false (F)