Which of the following statements best illustrates "Luddite reasoning"?
A. Labor is necessary for building and maintaining machines, and so increased demand for machines increases the demand for labor.
B. Technology increases total output, and so it will increase the demand for labor.
C. Technology makes it possible to replace workers with machines, and so it will decrease the overall demand for labor.
D. New technology changes the type of labor demanded.
Answer: C
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
The production function is a relationship between the amount of labor employed and
A) the wage rate paid to the workers. B) the maximum quantity of real GDP that can be produced. C) the maximum quantity of nominal GDP that can be produced. D) the amount of labor workers supply. E) all other resources at different levels of employment.
Markets tend to produce too little of an excludable public good because
A) transaction costs are high. B) of the lack of rivalry. C) these goods are depletable. D) All of the above.
A production possibilities frontier will be bowed out if
a. there is scarcity b. resources are used efficiently c. production of one good involves an opportunity cost d. resources are not perfectly adaptable to making each good e. technology is improving