Explain how changes in the stock of capital affect aggregate supply
Changes in the stock of capital will alter the amount of goods and services the economy can produce. Investing in capital improves the quantity and quality of the capital stock, which lowers the cost of production in the short run. This change in turn shifts the short-run aggregate supply curve rightward and firms will supply more output at every price level. It also allows output to be permanently greater than before, shifting the long-run aggregate supply curve rightward, ceteris paribus.
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Under a fixed exchange rate system, the central bank of a country experiencing a balance of payments deficit will:
A) increase the supply of the domestic currency to prevent currency depreciation. B) increase the demand for the domestic currency to prevent currency depreciation. C) increase the supply of domestic currency to prevent a currency appreciation. D) increase the demand for domestic currency to prevent a currency appreciation.
The tendency of workers to supply more labor in response to a larger reward for working is called the ________ of a higher real wage on the quantity of labor supplied
A) homogeneous labor supply effect B) negative correlation effect C) income effect D) substitution effect
Which is not a good method of providing public type goods by private means?
A. Clubs B. Free markets with competing entrepreneurs C. Funding by donation D. Private contracts
George loses his job. The BLS will consider him unemployed
A) immediately. B) only after his severance pay runs out. C) only after he begins to actively seek another job. D) even if he accepts a cheaper part-time job.