Which of the following observations is true?
A. The cost disease is most prevalent in low income countries.
B. The cost disease affects public goods but not private goods.
C. The cost disease is most prevalent in commodity markets.
D. The cost disease occurs as the opportunity cost of labor increases.
Answer: D
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When the Fed sells government securities to a bank, how are the Fed's assets affected?
A) The amount of the Fed's government securities decreases. B) The amount of the Fed's government securities increases. C) The amount of reserves held at the Fed increases. D) The amount of reserves held at the Fed decreases.
If a country has a large percentage of its population under 15 years old, then compared with other countries, this creates
a. a problem because they consume more than they produce b. a problem because they cause more capital goods to be produced c. a benefit because they boost demand for consumption goods d. a benefit because they cause more capital goods to be produced e. neither a problem nor a benefit since age is irrelevant
Which of the following practices would indicate that an employer is trying to overcome a moral-hazard problem with his employees?
a. The employer pays his workers wages that are unusually high for the industry and region. b. The employer pays his employees year-end bonuses depending to how well the business does and his observations of the employees' efforts. c. The employer has voluntarily removed video cameras from the factory floor. d. Both A and B are correct.
The quantity theory of money assumes that
A. velocity varies inversely with interest rates. B. if velocity equals six, the Fed can increase nominal GDP by 30 percent if it increases the money supply by 5 percent. C. changes in the money supply affect output but not prices. D. changes in velocity are so small that velocity can be considered constant.