An earthquake destroys a good portion of the capital stock. How would you expect this to affect the capital—labor ratio in the long run? There would be
A) a rightward movement along the saving-per-worker curve and an increase in the capital—labor ratio.
B) no change in the long-run capital—labor ratio.
C) a downward shift in the saving-per-worker curve and a decrease in the capital—labor ratio.
D) a leftward movement along the saving-per-worker curve and a decrease in the capital—labor ratio.
B
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Compared to the 1960s, the effectiveness lag is ________ due to ________
A) shorter, changes in fiscal policy B) longer, structural changes in the economy C) shorter, deregulation D) longer, increased sensitivity of consumer spending to interest rates
According to Gresham's Law,
a. inflation and unemployment are inversely related. b. tax rates and tax revenues are inversely related. c. bad money drives out good money. d. inflation is inevitable in the long run.