If the MRP of labor were $100 and the wage rate were $200,
A. exactly the right amount of labor is being used.
B. not enough labor is being used.
C. only half as much labor is being used as should used.
D. too much labor is being used.
D. too much labor is being used.
Economics
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Economics
In the Keynesian model, an increase in government purchases affects output by
A) increasing labor supply, because workers feel effectively poorer. B) increasing saving to pay for future taxes, lowering the real interest rate and shifting the IS curve to the left. C) increasing the real interest rate due to crowding out, reducing aggregate demand. D) increasing aggregate demand as national saving declines.
Economics