When diminishing marginal returns starts occurring, the addition of successive units of a variable resource to a fixed resource will cause the firm's production to diminish.
a. true
b. false
Answer: b. false
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If a nation is going to benefit fully from technological advances and entrepreneurial ideas, it must
a. be relatively easy for persons from diverse backgrounds to try out their ideas at a relatively low cost. b. have a mechanism that will bring unsound projects to a halt. c. have a central investment authority that will review projects and decide which should be undertaken. d. be both a and b.
In a boom:
a) Unemployment is likely to fall b) Prices are likely to fall c) Demand is likely to fall d) Imports are likely to fall
Using Figure 3 above, suppose that the economy was at Y3. This level of GDP would be considered:
A. recessionary. B. a long run level of output. C. a natural rate of output. D. inflationary.
A fiscal policy action to close an expansionary gap is to:
A. increase the marginal propensity to consume. B. increase taxes. C. increase government purchases. D. increase transfer payments.