Question 7 If the elasticities of output with respect to capital and labor add up to 1, and both capital and labor are increased simultaneously by 5%, output will rise by a) less than 5% b) more than 5% c) 5% exactly d) none above Question 8 Consider Y=C+1 (r)+ G, where r is the real interest rate. With Y given, following a decrease in G. in equilibrium a) I decreases b) I increases

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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Question 7
If the elasticities of output with respect to capital
and labor add up to 1, and both capital and labor
are increased simultaneously by 5%, output will
rise by
a) less than 5%
b) more than 5%
c) 5% exactly
d) none above
Question 8
Consider Y=C+1 (r)+ G, where r is the real
interest rate. With Y given, following a decrease in
G, in equilibrium
a) I decreases
b) I increases
c) r decreases
d) B and C.
Transcribed Image Text:Question 7 If the elasticities of output with respect to capital and labor add up to 1, and both capital and labor are increased simultaneously by 5%, output will rise by a) less than 5% b) more than 5% c) 5% exactly d) none above Question 8 Consider Y=C+1 (r)+ G, where r is the real interest rate. With Y given, following a decrease in G, in equilibrium a) I decreases b) I increases c) r decreases d) B and C.
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