Stage III of the short-run Production Function is
A) the most efficient mix of inputs.
B) the least costly level of output.
C) where additional units of variable inputs will lead to less output.
D) where additional units of variable inputs will lead to more output.
C
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A new bank has reserves of $600,000, checkable deposits of $500,000, and government securities of $100,000. If the desired reserve ratio is 10 percent, the amount of loans this bank can make is
A) $60,000. B) $550,000. C) $50,000. D) $600,000. E) $540,000.
Comparative advantage has mixed results when it comes to predicting a country's trade patterns. Which of the following is FALSE?
A) There are many potential products an economy might export that use the same comparative advantage. B) A large share of international trade is not based on comparative advantage. C) Comparative advantage has proven completely incapable of predicting trade. D) Comparative advantage is a dynamic concept, which means that the spread of technology, improvement in skills, and learning-by-doing may alter a country's comparative advantage over time.
Assume that the government tries to reduce unemployment by increasing government spending. Which of the following unwelcome effects is not a side effect of this measure?
a. Lower overall (private plus government) borrowing in the real credit market b. Rising budget deficits. c. Increased real risk-free interest rate d. Higher inflation rates. e. Crowding out.
When we are running a federal budget surplus, the national debt
A. is definitely rising. B. is constant. C. may be falling. D. is definitely falling.