What is the difference between marginal product and average product?
A. Marginal product is the additional output that a firm decides to produce for the next quarter based on market conditions. Average product is the average output over the past four quarters.
B. Marginal product is the additional output that will be forthcoming from an additional worker, assuming that other inputs are constant. Average product is output per worker, or the total output divided by the number of workers.
C. Marginal product is the additional output for every extra dollar paid to workers, assuming that other inputs are constant. Average product is output divided by total wages.
D. Marginal product is the additional output that will be forthcoming from building an additional factory. Average product is output per worker, or the total output divided by the number of workers.
Ans: B. Marginal product is the additional output that will be forthcoming from an additional worker, assuming that other inputs are constant. Average product is output per worker, or the total output divided by the number of workers.
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Indicate whether the statement is true or false
If the central bank is facing the zero bound constraint and announces a higher inflation target,
A) the real interest rate will increase, which will decrease aggregate expenditure. B) the real interest rate will decrease, which will increase aggregate expenditure. C) the nominal interest rate will increase, which will decrease aggregate expenditure. D) the nominal interest rate will decrease, which will increase aggregate expenditure.
Suppose the marginal propensity to consume (MPC) is 0.9 and there is a $3,000 increase in planned investment. Given this information, real GDP will increase by
A) $3,000. B) $2,700. C) $30,000. D) $3,333.
The global financial and economic crisis that began to develop in 2007
A. arose in industrial countries. B. was the result of a prolonged period of declining world production. C. arose in developing countries. D. was worse than the Great Depression of the 1930s.