Which of the following statements is true?
a. Derived demand for labor depends on the demand for the product labor produces.
b. Unions can either increase demand or decrease the supply of labor.
c. Investment in human capital is expected to increase the demand for those workers.
d. All of these.
QUESTION 2Suppose an initial increase in government expenditure increases output by 50,000 . If the size of the multiplier is 2.5, the size of the initial increase in government expenditure was:
a. 25,000.
b. 20,000.
c. 12,5000.
d. 1250.
e. 30,000.
QUESTION 3Aggregate income equals:
a. the sum of income earned by all laborers in the world economy.
b. the sum of income earned by all workers in the private sector.
c. the sum of the income earned by all the resource suppliers in an economy.
d. the total income of all employees after payment of income tax.
e. the total income of all employees after purchases of necessities.
QUESTION 4If product price decreases, then:
a. MP will increase.
b. MFC will increase.
c. MRP will increase.
d. MRP will decrease.
QUESTION 5Suppose the government expenditure increases by 200 and the simple spending multiplier equals 5 . The final increase in output will be:
a. 6000.
b. 500.
c. 200.
d. more than 200.
e. less than 200.
QUESTION 6Which of the following is not a component of aggregate expenditure?
a. Consumption expenditures
b. Investment
c. Imports
d. Rent
e. Government purchases
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