If an Increase in Capital Increases Labour Productivity, the Supply

question 76

Multiple Choice

If an increase in capital increases labour productivity, the supply of labour _______ and the demand for labour _______.

• A)decreases; stays the same
• B)increases; decreases
• C)stays the same; increases
• D)increases; increases
• E)increases; stays the same

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Definitions:

Zero-Coupon Bonds

Bonds that do not pay periodic interest, instead being sold at a discount and maturing at face value, offering a profit at redemption.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, considering all payments of principal and interest at expected times.

Zero-Coupon Bond

A Zero-Coupon Bond is a debt security that does not pay interest (coupon) during its life but is issued at a substantial discount to its face value, with the face value being repaid at maturity.

Forward Interest Rate

An interest rate agreed upon for a loan or investment in the future, often derived from the yield curve of current interest rates.