The marginal product of labor is the change in
A) total cost from employing one more worker.
B) total revenue from employing one more worker.
C) average product from employing one more worker.
D) total output from employing one more worker.
E) total output divided by the change in cost from employing one more worker.
D
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If the Federal Reserve announces that its target for the federal funds rate is rising from 4 percent to 4.25 percent, how do you expect workers and firms to react?
A) If the Fed's announcement is not credible, workers and firms will not expect inflation to fall so they will reduce their consumption and investment spending, which will increase aggregate demand and reduce inflation. B) As long as the Fed's announcement is credible, workers and firms will reduce their consumption and investment spending, which will reduce aggregate demand and reduce inflation. C) As long as the Fed's announcement is credible, workers and firms will increase their consumption and investment spending, which will increase aggregate demand and inflation. D) Workers and firms will incorporate the increase in interest rates into their expectations of inflation, and they will expect inflation to rise as a result of Fed's policy announcement.
In the long run, following a combination of a negative demand shock and a temporary negative supply shock,
A) both inflation and output return to the original long-run equilibrium values. B) inflation is permanently increased, while output returns to potential output. C) output returns to potential output, while inflation may be higher or lower than its initial value. D) inflation is permanently reduced, while output returns to potential output. E) None of the above.