The way it is typically drawn, what does the slope of the aggregate production function imply?
A) Diminishing marginal product of labor
B) Diminishing marginal product of capital
C) Increasing returns to scale
D) Decreasing returns to scale
Answer: A) Diminishing marginal product of labor
You might also like to view...
If the Federal Reserve announces that its target for the federal funds rate is falling from 3 percent to 2.25 percent, how do you expect workers and firms to react?
A) As long as the Fed's announcement is credible, workers and firms will increase their consumption and investment spending, which will increase aggregate demand and inflation. B) As long as the Fed's announcement is credible, workers and firms will decrease their consumption and investment spending, which will decrease aggregate demand and inflation. C) Workers and firms will incorporate the decrease in interest rates into their expectations of inflation, and they will expect inflation to fall as a result of Fed's policy announcement. D) If the Fed's announcement is not credible, workers and firms will not expect inflation to rise so they will increase their consumption and investment spending, which will decrease aggregate demand and increase inflation.
Probably the most significant factor explaining the drastic drop in the number of bank failures since the Great Depression has been
A) the creation of the FDIC. B) rapid economic growth since 1941. C) the employment of new procedures by the Federal Reserve. D) better bank management.
The total cost to a firm of producing zero units of output is
a. zero in both the short run and the long run b. its fixed cost in the short run, zero in the long run c. its fixed cost in the long run, zero in the short run d. its fixed cost in both the short run and the long run e. its variable cost in both the short run and the long run
Which of the following factors substantially reduces the effectiveness of discretionary changes in tax rates or government expenditures as a stabilization tool?
a. Even though computer models have enhanced our forecasting ability, policy makers at the Federal Reserve have been reluctant to utilize information supplied by the models. b. When fiscal policy is altered, the Fed generally shifts monetary policy in a manner that offsets the impact of the fiscal action. c. Changes in government expenditures and taxes are always offset by equal changes in private spending. d. Since it takes time for fiscal policy to work and since the future is difficult to forecast, it is difficult to time fiscal policy changes correctly.