Solved

If Capital and Labor Are Gross Complements,an Increase in the Cost

Question 7

Multiple Choice

If capital and labor are gross complements,an increase in the cost of capital will:


A) increase the supply of labor and drive the wage down
B) decrease the demand for labor and drive the wage down
C) increase the demand for labor and drive the wage up
D) either increase or decrease the demand for labor depending on whether the substitution effect or the output effect is stronger

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents