In the long run, which of the following explains why are there no changes to returns to capital and wages when FDI or labor immigration occurs?
a. World prices of output are unchanged.
b. Marginal productivities are unchanged.
c. There is no change in the capitallabor ration in either industry.
d. World prices of output and marginal productivities are unchanged.
Ans: c. There is no change in the capitallabor ration in either industry.
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The annual cost of producing the entire output of goods and services in the economy
A) includes durable goods but excludes nondurable goods. B) is total income. C) can be calculated entirely on the basis of financial transactions. D) includes financial transactions.
Which set of changes is definitely predicted to lower Real GDP in the short run?
A) The money supply rises and labor productivity rises. B) The U.S. dollar depreciates and wage rates fall. C) The U.S. dollar appreciates and labor productivity rises. D) Foreign real national income falls and wage rates rise. E) none of the above