If a firm increases its capital stock per person while holding ...

[dollx]

If a firm increases its capital stock per person while holding constant the number of workers employed, the firm is said to experience
 
  A) capital augmentation. B) labor intensity.
  C) capital deepening. D) investment deepening.

Question 2

The U.S. has the largest trade deficit with China. How will a ban on trade with China affect the current account of the U.S.?
 
  What will be an ideal response?

[FergA]

Answer to Question 1

C

Answer to Question 2

Ending all trade with China might do little to the overall U.S. trade deficit. It depends upon whether the purchases that the United States made from China simply shift to other foreign suppliers of the same kinds of goods, for example Vietnam. In fact, lots of developing countries now produce the manufactured goods that the US currently imports from China. If U.S. consumers switched their purchases of Chinese exports to other foreign countries, the overall U.S. trade deficit may not change at all. In other words, the U.S. trade deficit has a lot to do with the decisions of U.S. consumers, and relatively little to do with the particular trading partners from whom they buy laptops and printers.