You operate a shop that repairs TVs and VCRs. The going wage rate in a competitive market for skilled repair people is $18 per hour. Given the current demand for your services, the marginal revenue product of your repair people is $28 per hour. You should
A. increase the number of repair people working for you.
B. decrease the number of repair people working for you.
C. make no change in the number of people you use.
D. lay off all your employees and do all the work yourself.
A. increase the number of repair people working for you.
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Compared to the GDP deflator, the consumer price index measures:
A) the price of all the goods and services produced in the economy. B) the price of a fixed market basket of goods and services. C) the price of exported goods and services. D) the price of wholesale goods and services.
A temporary supply shock that raises prices
A) will cause the real interest rate to rise in the long run. B) has no long-run impact on inflation and output. C) causes output to fall in the long run. D) causes inflation to rise in the long run.