In the real business cycle model, a persistent increase in total factor productivity
A) increases the real wage and increases the price level.
B) increases the real wage and decreases the price level.
C) decreases the real wage and increases the price level.
D) decreases the real wage and decreases the price level.
B
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An individual derives utility from consuming "all other goods," g, and clean air (measured by the reduction in particulate matter per m3), a, as measured by the utility function U(g,a) = g0.6a0.4
The price of consumer goods equals $20 and the price of clean air (abatement) equals $10. What is the slope of the Engel curve when income increases from $100 to $200? A) The slope is 25. B) The slope is -25. C) The slope is zero. D) The slope is infinite.
Declining-block quantity discrimination makes sense if
A) buyers of smaller quantities are more price sensitive than buyers of larger quantities. B) buyers of smaller quantities are less price sensitive than buyers of larger quantities. C) demand for the good is perfectly elastic. D) the lower price for larger quantities encourages all consumers to purchase the larger quantity.