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Unformatted text preview: he potential inflation C. Couldn’t effectively control the interest rate in the market and hence should try different policies D. All of the above 6. Suppose that for a medicine company there are fixed costs of inventing the medicine formula before production. Then it has constant marginal costs of producing one unit of it. What is the correct about the production function ? A. Constant return to scale B. Increasing return to scale C. Decreasing return to scale D. Profits will always be 0 7. In the Romer model, when the share of workers in R&D increases A. The growth rate of income per person decreases B. The level of income per person increases and the growth rate does not change C. The growth rate of income per person increases D. The growth rate of income per person is unchanged 8. The natural rate of unemployment is a combination of : A. Frictional unemployment and cyclical unemployment B. Structural unemployment and cyclical unemployment C. Cyclical unemployment, Structural unemployment and frictiona...
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- Fall '08