Suppose that there are diminishing returns to capital. Suppose also that two countries are the same except one has less capital and so less real GDP per person. Suppose that both increase their saving rate from 3 percent to 4 percent. In the long run

a. both countries will have permanently higher growth rates of real GDP per person, and the growth rate will be higher in the country with more capital.
b. both countries will have permanently higher growth rates of real GDP per person, and the growth rate will be higher in the country with less capital.
c. both countries will have higher levels of real GDP per person, and the temporary increase in growth in the level of real GDP per person will have been greater in the country with more capital.
d. both countries will have higher levels of real GDP per person, and the temporary increase in growth in the level of real GDP per person will have been greater in the country with less capital.

d

Economics

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Suppose a competitive firm is paying a wage of $12 an hour and sells its product at $3 per unit. Assume that labor is the only input. If hiring another worker would increase output by three units per hour, then to maximize profits the firm should

A) not hire an additional worker. B) not change the number of workers it currently hires. C) hire another worker. D) There is not enough information to answer the question.

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The goal of the consumer price index is to measure changes in the

a. costs of production. b. cost of living. c. relative prices of consumer goods. d. production of consumer goods.

Economics