Suppose the Productivity of Labor Increases and at the Same

question 50

Multiple Choice

Suppose the productivity of labor increases and at the same time the price of capital, which is complementary to labor, increases. As a result, the demand for labor

• A)will increase.
• B)will decrease.
• C)may either increase or decrease.
• D)will not change.

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Definitions:

Rate of Exchange

The value of one currency for the purpose of conversion to another, indicating how much foreign currency can be exchanged for a unit of domestic currency.

Rate of Exchange

The price at which one currency can be exchanged for another, determining how much of one currency can be purchased with another currency.

Exchange Rate

The value of one country's currency in terms of another currency.

Exchange Rate

The price at which one currency can be exchanged for another.