A change in the supply of one factor of production
a. can alter the earnings of all of the other factors.
b. alters the earnings of capital and labor but not land.
c. will not change the marginal productivities of other factors but may change their prices.
d. alters the earnings of that factor only.
a
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With the federal funds rate near zero and the economy still struggling, In response to already low interest rates doing little to stimulate the economy, the Fed began buying 10-year Treasury notes and certain mortgage-backed securities to keep
interest rates low. This policy is known as A) quantitative easing. B) securities-bubble deflating. C) contractionary monetary policy. D) inflation targeting.
Explain how a decrease in housing prices may reduce the wealth of some while increasing the wealth of others. What effect would this have on aggregate consumption?
What will be an ideal response?
Suppose Ben owns a small company that makes kites. The market for kites is perfectly competitive, and kites sell for $25 each. Ben's total production costs vary depending on the number of kites he makes each day, as shown in the accompanying table.Number of kites Per DayTotal Cost Per Day ($)0100111021263148417252006235 If Ben's fixed cost rises, then in the short run, his:
A. profit-maximizing level of output will not change. B. profit-maximizing level of output will fall. C. economic profit will not change. D. profit-maximizing level of output will rise.
Assume a two-country, two-commodity, two-input model where the following relationships hold:(K/L)U.S. > (K/L)ROW(K/L)automobiles > (K/L)shoes (K/L)U.S. is the capital-labor ratio in the United States, (K/L)ROW is the capital-labor ratio in the Rest of the World, (K/L)automobiles indicates the capital-labor ratio in the production of automobiles, and (K/L)shoes indicates the capital-labor ratio in the production of shoes.Assume further that technology and tastes are the same in the United States and the Rest of the World. According to the Heckscher-Ohlin model, free trade between the United States and the Rest of the World would result in
A. an improvement in economic well-being in both the United States and the Rest of the World. B. no change in economic well-being in the United States but an improvement in economic well-being in the Rest of the World. C. deterioration of economic well-being in the United States but an improvement in economic well-being in the Rest of the World. D. an improvement in economic well-being in the United States but deterioration of economic well-being in the Rest of the World.