When output increases by 1%, the number of jobs does not tend to rise by 1% in the short run. Which of the following statements represents one of the reasons why this is true?

A. Firms are likely to meet some of the increase in output by reducing labor productivity.
B. A firm is likely to meet some of the increase in output by decreasing the number of hours worked per job.
C. Firms are likely to meet part of the increase in output by eliminating any excess capital they may have.
D. A firm is likely to meet some of the increase in output by increasing the number of hours worked per job.


Answer: D

Economics

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If the average total cost of supplying a good exceeds the price at which the good can be sold, then entrepreneurs have:

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________ is a cost that changes with the quantity produced by the firm and is incurred by the firm in the short run.

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According to the Taylor rule, if inflation equals 3 percent and there is a recessionary gap equal to 3 percent of potential output, the Fed will set a real interest rate of ________ percent and a nominal interest rate of ________ percent.

A. 1; 3 B. 3; 3 C. 1; 4 D. 2; 4

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