Consider a Hypothetical Economy in Which Only

question 115

Multiple Choice

Consider a hypothetical economy in which only
Computers and shoes are produced.If two resources
Are being used, labor and capital, then any increase in
Immigration in the long run:

• A)will decrease wages in the shoe industry.
• B)will decrease wages in the computer industry.
• C)will increase wages in the shoe industry.
• D)will keep wages constant because marginal products do not change.

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Definitions:

Rational Expectations

The hypothesis that individuals and firms use all available information to make economic decisions and forecasts, impacting market outcomes.

Fiscal Authorities

Government bodies responsible for managing a country's economic policy, particularly regarding taxation and government spending.

Monetary Authorities

Institutions responsible for regulating a country's money supply and financial policies, such as central banks.

Inflation Rates

The rate at which the general level of prices for goods and services is rising, eroding purchasing power over time.