According to the law of diminishing returns, when some factors of production are fixed, in order to increase production by a given amount, a firm will eventually need to add successively:
A. smaller and smaller quantities of the variable factors of production.
B. larger and larger quantities of the fixed factor of production.
C. larger and larger quantities of the variable factors of production.
D. constant quantities of the variable factors of production.
Answer: C
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A. marginal utility B. secular utility C. total utility D. individual utility
Potential GDP refers to the level of
A) real GDP in the short run. B) real GDP in the long run. C) nominal GDP in the long run. D) nominal GDP in the short run.
Which of the following will tend to decrease the excess reserves of the commercial banking system? a. The central bank buys bonds from the public
b. The central bank sells bonds to a commercial bank. c. The central bank reduces its discount rate. d. The central bank decreases the required reserve ratio.
Rita puts $10,000 into each of two different assets. The first asset pays 10 percent interest and the second pays 5 percent. According to the rule of 70, what is the approximate difference in the value of the two assets after 14 years?
a. $12,000 b. $14,000 c. $15,500 d. $20,000