Is knowledge capital subject to the law of diminishing returns? Explain
What will be an ideal response?
The law of diminishing returns states that successive increases in capital result in successively smaller and smaller increases in output. Knowledge capital may not be subject to the same law of diminishing returns that physical capital is. In fact, knowledge capital may experience increasing returns because knowledge, once discovered, is available to everyone and is therefore more likely to generate new technologies and economic growth.
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The demand for the U.S. dollar in the foreign exchange market is a derived demand. A derived demand means that the demand is derived from
A) government policy. B) the demand for U.S. goods, services, and assets. C) the supply of U.S. dollars. D) the demand by U.S. residents for foreign goods, services, and assets. E) the domestic demand for U.S. goods and services.
In 2008 and 2009, the quantity theory of money did a ________ job of predicting year-to-year changes in the inflation rate because ________
A) good; interest rates behaved predictably B) poor; the Fed changed the growth rate of the quantity of money too quickly C) poor; velocity of circulation plunged D) good; real GDP remained stable E) poor; the price level and the velocity of circulation did not change
The demand for loanable funds is downward sloping because the ________ the interest rate, the ________ the number of profitable investment projects a firm can undertake, and the ________ the quantity demanded of loanable funds
A) greater; greater; greater B) lower; greater; greater C) greater; smaller; greater D) lower; smaller; greater
The graph shown demonstrates a tax on buyers. Which of the following can be said about the effect of this tax?
A. The tax creates a shortage, and rationing must occur.
B. The tax creates a surplus, and the government must buy the excess.
C. The tax creates a shortage, and the government must regulate the market.
D. None of these is true