When manufacturing a car, parts must be soldered together. This work can be done by labor or by a robot (capital). More robots will be hired when the price of labor increases. This is known as
A) the effect of changing labor productivity.
B) marginal revenue product.
C) the complementary effect.
D) the substitution effect.
D
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Specialization of productive activity between men and women might explain why
A) a married woman earns less than a married man. B) a never-married man earns more than a never-married woman. C) a never-married man earns the same as a married man. D) None of the above answers is correct.
In general, the substitution effect of an increase in the price of a normal good:
A. will cause the individual to buy more of that good because they have relatively more income. B. will cause the individual to buy less of that good because they have relatively less income. C. will cause the individual to buy more of that good and less of others because it is relatively less expensive. D. will cause the individual to buy less of that good and more of others because it is relatively more expensive.
Under a managed float, if U.S. GDP suddenly increased, which of the following actions would the Bank of England need to take in order to stop any movement in the dollar-pound exchange rate?
a. Buy British pounds for dollars in order to shift the demand curve for pounds leftward b. Sell British pounds for dollars in order to shift the supply curve for pounds leftward c. Sell British pounds for dollars in order to shift the supply curve for pounds rightward d. Buy British pounds for dollars in order to shift the demand curve for pounds rightward e. Do nothing, since purchasing power parity will correct the situation in the short run.
The imposition of an import quota shifts
a. the supply of currency right, so the exchange rate falls. b. the supply of currency left, so the exchange rate rises. c. the demand for currency right, so the exchange rate rises. d. the demand for currency left, so the exchange rate falls.