What are the effects of an increase in the population on potential GDP, the quantity of labor, the real wage rate, and potential GDP per hour of labor?
What will be an ideal response?
An increase in population increases the supply of labor. Employment increases and the real wage rate falls. The increase in employment creates a movement along the aggregate production function so potential GDP increases. Because of diminishing returns, potential GDP per hour of labor decreases.
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Taxes assessed on firms and employees on wages and salaries earned are called
A) dividend taxes. B) payroll taxes. C) corporate profits taxes. D) earned income taxes.
A standard which came to the market first, such as the QWERTY letter layout in typewriters, can become entrenched (this layout is still used for computer keyboards today). What is this phenomenon called?
A) path dependency B) sunk cost C) comparative advantage D) network externalities