The focus of the short-run macro model is on the role of
a. spending in explaining economic fluctuations
b. labor in explaining economic fluctuations
c. financial markets in explaining economic fluctuations
d. output in explaining economic fluctuations
e. resources in explaining economic fluctuations.
A
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Suppose that the Australian economy initially uses 50 billion hours of labor to produce $5 trillion of real GDP. If 50 billion more hours are employed and Australia's real GDP increases by $4 trillion more,
A) Australia's production function exhibits diminishing returns. B) Australia's production function exhibits increasing returns. C) Australia has an Okun Wedge of $1 trillion. D) Australia has positive Lucas Wedge. E) Australia's production possibility frontier has a positive slope.
Which of the following would encourage the development of new technologies?
a. Rising interest rates b. Reduced government subsidies for research and development c. Falling wages d. Increased tax rates on corporate profits e. Increased patent protection for inventions