What is the effect on real GDP per person if labor productivity increases?
What will be an ideal response?
Real GDP equals (aggregate hours) × (labor productivity). Hence an increase in labor productivity increases real GDP. Real GDP per person equals (real GDP)/(population). Therefore an increase in real GDP with no change in the population increases real GDP per person.
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Which of the following holds the reserves of private banks in the United States?
A) The Treasury Department B) The Fed C) The Pentagon D) Various venture capitalists
If a perfectly competitive firm has economic profits greater than zero, then we know that
A) the firm's industry is not in long-run equilibrium. B) the firm's industry is in long-run equilibrium. C) the firm is producing at the bottom of the average total cost curve. D) the firm will reduce output.