If the Ratio of Labor Costs to Materials Costs Is

question 44

Essay

If the ratio of labor costs to materials costs is 1/4 and labor costs are decreasing by 20 percent per year while material costs are increasing by 10 percent per year,what is the ratio at the end of the second year? (Note: This means that at the present time labor costs are 25 percent of materials costs.)

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Definitions:

Savings

The portion of income not spent on current consumption, often set aside for future use or investment.

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit, often through the purchase of assets like stocks, bonds, or real estate.

Depression

A prolonged period of significant economic decline characterized by a substantial increase in unemployment, a drop in available credit, shrinking output, and bankruptcies.

Keynes

John Maynard Keynes was a British economist whose theories revolutionized macroeconomic practices and governmental economic policies.