Suppose the Payments to Capital and Labor Are (W*L*)/Y* = $w ^ { * } L ^ { * } + r ^ { * } K ^ { * } < Y ^ { * }$

question 120

Multiple Choice

Suppose the payments to capital and labor are (w*L*) /Y* = 2/3 and (r*L*) /Y* = 2/3, respectively. One implication of this result is:

• A) \(w ^ { * } L ^ { * } + r ^ { * } K ^ { * } < Y ^ { * }\)
• B) \(w ^ { * } L ^ { * } + r ^ { * } K ^ { * } = Y ^ { * }\)
• C) \(w ^ { * } L ^ { * } + r ^ { * } K ^ { * } > Y ^ { * }\)
• D) \(\left( w ^ { * } L ^ { * } / r ^ { * } K ^ { * } \right) = Y ^ { * }\)
• E) \(\left( w ^ { * } L ^ { * } / Y ^ { * } \right) \left( r ^ { * } K ^ { * } / Y ^ { * } \right) = 1\)

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Definitions:

Enlightenment Thinking

A philosophical movement of the 18th century, emphasizing reason, individualism, and skepticism towards traditional doctrines.

Stamp Act

A 1765 British law imposing a tax on all paper documents in the American colonies, leading to widespread protest and contributing to the American Revolutionary movement.

Parliamentary Authority

A set of rules that governs how procedures are carried out in a deliberative assembly, especially within a legislature following the parliamentary system.

Indirect Tax

A tax collected by an intermediary (such as a retailer) from the person who bears the ultimate economic burden of the tax (such as the consumer).