If Capital and Labor Are Gross Complements,an Increase in the Cost

question 36

Multiple Choice

If capital and labor are gross complements,an increase in the cost of capital will:

• A)increase the supply of labor and drive the wage down
• B)decrease the demand for labor and drive the wage down
• C)increase the demand for labor and drive the wage up
• D)either increase or decrease the demand for labor depending on whether the substitution effect or the output effect is stronger

---

Definitions:

Factor Analytic

A statistical method used to describe variability among observed, correlated variables in terms of a potentially lower number of unobserved variables called factors.

Big Five

An approach that defines personality in humans by five primary factors: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Lexical Hypothesis

Traits important for survival and reproduction are embedded in our language, with the most important traits represented by the largest number of words.

Embedded

The state of being firmly and deeply ingrained or fixed within a surrounding whole.