What is the basis of the "Cheap Foreign Labor" argument and what are its weaknesses?
What will be an ideal response?
The basis of the argument is the domestic producers cannot compete against foreign produces who are paying their workers low wages. There are two things wrong with this argument. First, wages reflect productivity. Workers in the U.S. earn higher wages because they are more productive. Second, trade flows not according to absolute advantage but according to comparative advantage. All countries benefit, even if one country is more efficient at producing everything.
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Which of the following is consistent with secular deflation?
A) a persistently decreasing price level caused by money being withdrawn from the economy B) a persistently increasing price level caused by several periods of economic growth with decreasing AD C) a persistently decreasing price level caused by increases in government expenditures D) a persistently decreasing price level caused by several periods of economic growth with stable AD
Marginal physical product can tell a producer
a. at what point to stop adding inputs to the production process. b. how much profit will be made at each level of production. c. how much the last input added to the total amount of revenue. d. how much the last input added to the total amount of production.