Considering only the goods and forex markets, as the economy adjusts to lower rates of interest and equilibrium is restored, the level of GDP will:
A) fall.
B) rise.
C) become unstable.
D) decline very gradually.
Answer: B) rise
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If an individual possesses an ability that others cannot acquire, payment to that individual is
a. partly economic rent. b. a return called the real wage. c. a return from investment in human capital. d. comparable to the return to well-trained nurses.
The labor demand curve of a purely competitive seller:
A. slopes downward because the firm must lower price to sell more output. B. slopes downward because labor productivity increases as successive workers are hired. C. is perfectly elastic because the firm is hiring an insignificant portion of the total labor supply. D. slopes downward because the marginal product of successive workers declines.
If a monopsony must negotiate with a union, then the wage will probably be
A) more than the value of marginal product. B) more than the marginal cost of labor. C) the same as if there had been no union. D) more than what it would have been without a union but not more than the value of marginal product.
John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance he will earn $100,000 and a 50 percent chance he will earn $300,000. If he does expand, there is a 30 percent chance he will earn $100,000, a 30 percent chance he will earn $300,000 and a 40 percent chance he will earn $500,000. It will cost him $150,000 to expand. The expected value of John's earnings if he chooses to expand is:
A. $320,000 B. $230,000 C. $900,000 D. $140,000