Suppose that MPL = 20 and MPK = 21. If W = 10 and R = 11, then a firm:
A. is producing its output at the lowest possible cost.
B. could reduce costs by employing more labor and less capital.
C. could reduce costs by employing more capital and less labor.
D. could minimize costs by employing more of both inputs.
B. could reduce costs by employing more labor and less capital.
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Which of the following is NOT a result of the double taxation of dividends?
A) Because profits that firms distribute to stockholders are taxed a second time, firms have an incentive to retain profits rather than to distribute them to stockholders. B) The return investors receive from buying stocks is reduced, which reduces the incentive people have to save in the form of stock investments and increases the costs to firms of raising funds. C) It gives firms an incentive to take on what may be an excessive level of debt rather than issue stock. D) The decline in retained profits results in increased inefficiency.
According to New Keynesians, why can firms increase output in the short run in response to higher prices?
What will be an ideal response?
Suppose Iceland goes from being an isolated country to being an importer of coats. As a result,
a. consumer surplus increases for consumers of coats in Iceland. b. producer surplus increases for producers of coats in Iceland. c. total surplus remains unchanged in the coat market in Iceland. d. it is reasonable to infer that Iceland has a comparative advantage over other countries in coat production.
The total demand for money curve will shift to the right as a result of:
A. an increase in nominal GDP. B. an increase in the interest rate. C. a decline in the interest rate. D. a decline in nominal GDP.