marginal product theory
Not what you're looking for?
In each of the following scenarios, predict what will happen to:
1) Employment, 2) real wages, 3) output, 4) the interest rate, and 5) the price level
1) There is a sudden decrease in consumption due to a decline in consumer confidence.
2) There is an increase in productivity (in the sense that each worker can now produce more, given the same capital stock).
Purchase this Solution
Solution Summary
An increase in productivity is inferred.
Solution Preview
1) In case of a sudden decrease in consumption (C), the aggregate output (Y) will be reduced, according to the GDP formula:
Y = C + I + G
As the aggregate demand decline with the desired consumption, there is less money demanded in the market. therefore, the interest rate will drop.
The drop in Y will ...
Purchase this Solution
Free BrainMass Quizzes
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.