What happens to the real wage rate and potential GDP if population increases?
What will be an ideal response?
An increase in population increases the supply of labor. As a result, the labor supply curve shifts rightward. The labor demand curve does not shift. The increase in the supply of labor means that employment increases and the real wage rate falls. The economy moves along its (unchanged) production function to a higher level of potential GDP.
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The question of "How are goods and services produced?" most closely addresses which of the following issues?
A) Why are Christmas trees popular only in December? B) Should contractors build residential housing or shopping malls? C) Is income distributed fairly in the United States? D) Should Ford build SUVs or luxury cars? E) Should Ford use expensive industrial robots or inexpensive Mexican autoworkers to produce SUVs?
"A reduction in the rate at which stock dividends are taxed will lead to greater investment in the stock market." This is an example of: a. a positive economic statement
b. a negative economic statement. c. the fallacy of composition. d. a normative economic statement.