If an Economy Experiences an Increase in Its Labor Force,everything

question 25

Multiple Choice

If an economy experiences an increase in its labor force,everything else constant,then its production possibilities frontier (PPF) will

• A)expand outward but keep its original shape.
• B)expand outward largely in the direction of the labor intensive good.
• C)expand outward largely in the direction of the capital intensive good.
• D)not expand until capital grows.

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Definitions:

Risk Premium

The additional yield beyond the risk-free rate that investors demand as a reward for taking on the risk associated with an investment.

Risk-Free Asset

An investment with a guaranteed return and no risk of financial loss.

Standard Deviation

Standard deviation measures the amount of variation or dispersion from the average in a set of data points, indicating how spread out the numbers are.

Real Rate of Interest

The interest rate that has been adjusted to remove the effects of inflation; reflects the true cost of borrowing.