Author Question: Suppose that Year 2 is the base year. The CPI for Year 1 is approximately A) 80.0. B) 90.0. C) ... (Read 82 times)

Beheh · **on:** Jun 30, 2018

Suppose that Year 2 is the base year. The CPI for Year 1 is approximately

A) 80.0.
B) 90.0.
C) 100.0.
D) 120.0.

Question 2

Equilibrium market prices for capital and labor are 10 and 8, respectively. Then, the economy experiences one or more supply shocks, so that the marginal product of capital is 12, and the marginal product of labor is 9.

Assuming that the available quantities of capital and labor are fixed, which of the following is (are) likely to decrease as the economy approaches its new equilibrium? A) real rental price of capital
B) total output
C) economic profits
D) the quantity of capital in use
E) none of the above