Which of the Following Situations Would Cause the Greatest Increase

question 54

Multiple Choice

Which of the following situations would cause the greatest increase in labor productivity?

• A)The employment rate increases and capital remains the same.
• B)The increase in the employment rate is greater than the increase in capital.
• C)The increase in capital is greater than the increase in the employment rate.
• D)The employment rate remains the same and capital decreases.

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Definitions:

Loan

A sum of money given to a person or entity with the expectation of repayment of the original sum along with agreed interest over a specified period.

Nominal Rate

Refers to the interest rate before adjustments for inflation or other factors.

Effective Rate

The actual interest rate that borrowers pay or investors receive on a financial product, once all the compounding periods are factored in, often higher than the nominal rate.

Compounding Interval

The frequency at which interest is applied to the principal sum of a loan or deposit, affecting the total interest earned or paid.