A depression can be defined as:
a. a mild reduction in total production coupled with a rising unemployment rate that lasts for several years.
b. a mild decline in total production that lasts less than six months
c. a severe fall in stock prices that causes financial panic and lasts for several years.
d. a severe reduction in total production coupled with high unemployment that lasts for several years.
e. a decline in government spending and taxes that lasts for several months.
d
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If average labor productivity in two countries is the same, average living standards will be higher in the country with:
A. the smaller population. B. the higher share of population employed. C. the lower share of population employed. D. the larger population.
The demand for labor is downward sloping because of:
a) Diminishing marginal returns to labor. b) Rising price. c) Falling marginal cost. d) Rising marginal physical product.
Ernie's Sushi-On-A-Stick is a perfectly competitive firm currently employing 75 workers. The marginal revenue product of the 75th worker is $9.00 per hour. The wage rate is $12.00 per hour. To increase profits, this firm should
A. increase employment until the MRP of labor equals $12.00. B. decrease employment until the MRP of labor equals $12.00. C. increase the price of sushi-on-a-stick so that the marginal revenue product increases to $12.00 per hour. D. continue hiring 75 workers because the firm earns a surplus of $3.00 on each worker hired.
Suppose an economy has an increase in labor input of 60 percent, while output has increased by 100 percent. Assuming no change in total factor productivity, calculate the percentage increase in the capital input
(Use the Cobb-Douglas production function Y = A .)