Refer to Figure 11-13. The lines shown in the diagram are isocost lines. A movement from CE to BD occurs when
A) the price of capital decreases while the price of labor increases.
B) the price of labor decreases while the price of capital remains unchanged.
C) the price of capital increases while the price of labor decreases.
D) the price of capital increases while the price of labor remains unchanged.
A
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A major point of the Baumol-Tobin model of the transactions demand for money is that they show that the
A) demand for money is related to income. B) velocity of money is constant. C) fraction of income that people wish to hold in the form of money is constant. D) interest sensitivity of the demand for money is based on a transactions motive shared by most people.
Suppose the economy of Catalania is experiencing a recession and policy makers decide to implement an expansionary monetary policy. After the implementation of the policy, there is a considerable time gap before the effect of the policy on the major economic variables is noticed. This is an example of: a. the neutrality of money. b. an inflationary gap
c. an administrative lag. d. an operational lag.