The Elasticity of Demand for Labor Varies

question 129

Multiple Choice

The elasticity of demand for labor varies:

• A) directly with changes in the interest rate.
• B) directly with labor's share of the total cost of the product.
• C) inversely with the elasticity of demand for the final product.
• D) inversely with the ease of substituting labor for other productive factors.

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Definitions:

Velocity of Money

The rate at which money is exchanged from one transaction to another, and how much a unit of currency is used in a given period of time.

Equation of Exchange

An economic formula representing the relationship between the money supply, its velocity, the price level, and the volume of transactions in an economy.

Inflation

The speed at which prices for products and services increase, leading to a decline in buying power.

Supply of Money

The total amount of money available in an economy at any given time, including cash, bank deposits, and liquid assets.