If the production function is Q = K.5L.5 and capital is fixed at 1 unit, then the average product of labor when L = 25 is:
A. 10.
B. 1/5.
C. 2/5.
D. None of the answers are correct.
Answer: B
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John Maynard Keynes wrote that economies can suffer recession or depression for many years if the government does not intervene.
Answer the following statement true (T) or false (F)
When poverty is defined by an absolute real income level, what will happen to the poverty rate if income per capita in a country continues to grow?
A) The poverty rate will increase forever. B) The poverty rate will eventually be zero. C) The poverty rate will increase and then decrease. D) The poverty rate will never change.
The recessionary GDP gap will differ from the AD shortfall when the
A. Multiplier effect lowers spending. B. Multiplier effect raises spending. C. Aggregate supply curve slopes upward. D. Budget is balanced.
Risk premium is the ________ amount that a ________ person would pay to avoid ________
A) maximum; risk-averse; taking a risk B) maximum; risk-neutral; losing everything C) minimum; risk-averse; taking a risk D) minimum; risk-loving; losing everything