The elasticity of labor demand is higher when:
A. there are many substitutes for labor in the production process.
B. the inputs that could be substituted for labor are relatively expensive.
C. labor productivity falls rapidly when output is increased.
D. a large amount of labor is essential to the production process.
Answer: A
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Figure 13-2 above illustrates an economy with an unstable commodity demand and two possible Fed policies, a constant real money supply or a constant interest. Which policy target promotes a stable economy best?
A) constant money supply, A0 to A1 B) constant money supply, B0 to B1 C) constant interest rate, A0 to A1 D) constant interest rate, B0 to B1
If government spending in a country declines by $10 billion and, at the same time, taxes increase by an equal amount, what is the total effect in the economy?
a. Equilibrium real GDP increases b. Equilibrium real GDP increases by $20 billion c. Equilibrium real GDP is unchanged d. Equilibrium real GDP decreases by more than $10 billion and less than $20 billion e. Equilibrium real GDP decreases by more than $20 billion