Author Question: Compared to the U.S. production function, the European production function is A) lower. B) the ... (Read 37 times)

sheilaspns · **on:** Jun 30, 2018

Compared to the U.S. production function, the European production function is

A) lower.
B) the same.
C) higher.
D) lower than the U.S. production function at low levels of employment and higher than the U.S. production function at high levels of employment.
E) higher than the U.S. production function at low levels of employment and lower than the U.S. production function at high levels of employment.

Question 2

Suppose that the following table represents all of the possible investments in the economy. If the nominal interest rate is six percent, what is the total amount of investment in the economy? (Note: The Returns are for one period later.)

Investment Cost Returns
A 100 105
B 300 321
C 200 216
D 50 55
E 400 416

Madisongo23 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

A

Answer to Question 2

At an interest rate of six percent, projects B, C and D are still worthwhile. So there will be 550 worth of investment in the economy.