When Factors of Production Are Not Fixed (As in the Long

question 37

Multiple Choice

When factors of production are not fixed (as in the long run) and labor immigrates, capital will:

• A) remain fixed because capital is never mobile.
• B) increase in the capital-intensive industry.
• C) move to the higher productivity use in the labor-intensive industry until returns are again equalized.
• D) become idled as owners of capital seek more profitable opportunities.

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Definitions:

Aggregate Demand

The total amount of goods and services demanded in an economy at a given overall price level and in a given time period.

Price Level Expectations

Price level expectations refer to the anticipated average price level of goods and services in the economy over a certain period, affecting consumer and business spending decisions.

Government Expenditures

Spending by the government sector including consumption, investment, transfer payments, and net exports.

1940s

A decade marked by significant global events including World War II and the beginning of the Cold War.