If an economy with constant returns to scale were to double its physical capital stock, its available natural resources, and its human capital, but leave the size of the labor force the same,
a. its output would stay the same and so would its productivity.
b. its output and productivity would increase, but less than double.
c. its output and productivity would increase by more than double.
d. None of the above is correct.
b
You might also like to view...
By fixing the exchange rate, the central bank gives up its ability to
A) adjust taxes. B) increase government spending. C) influence the economy through fiscal policy. D) depreciate the domestic currency. E) influence the economy through monetary policy.
Neper has finished a bachelor’s degree in nursing and is just starting his career. As a registered nurse, he has a(n) ______________ issued by the state that lets his patients know that he is qualified to practice.
b. service contract c. career guarantee d. occupational license
Labor unions ______
a. raise wages in unionized industries.
b. create labor shortages in non-unionized industries.
c. play a larger role in the current U.S. economy than in European countries such as Norway and Sweden.
d. prefer to operate in states with right-to-work laws.
Most economists would probably agree that new technologies are the single most important source of productivity improvement, hence of __________ in general.
A. economic growth B. human capital C. entrepreneurial activity D. absolute advantages