Explain how the real wage and the extra output produced by each worker determine the quantity of labor demanded by a firm
What will be an ideal response?
The firm compares the cost of hiring an extra worker (the real wage) to the benefit (the extra output produced by an extra worker). Because the firm wants to make a profit, it hires the worker as long as the extra output is greater than the real wage. Thus the firm will demand (hire) the quantity of workers such that the extra output produced by the worker is greater than or equal to the real wage rate. Because labor has diminishing returns, there is some point at which the last worker hired produces just enough output to justify the wage rate and so additional workers will not be hired.
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Explain how a stock market crash has the potential to lead to a recession in an economy
What will be an ideal response?
When the U. S. federal government runs a budget deficit, it borrows money by selling:
A. Treasury bills, notes, and bonds. B. publicly owned land. C. its gold reserves. D. financial assets located in foreign banks.