The traditional view of the production process is that capital is subject to
a. constant returns.
b. increasing returns.
c. diminishing returns.
d. diminishing returns for low levels of capital, and increasing returns for high levels of capital.
c
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In the foreign exchange market, an increase in the U.S. interest rate leads to ________ in the exchange rate because the supply of dollars ________
A) a fall; decreases B) a rise; increases C) a rise; decreases D) no change; does not change E) a fall; increases
If the government uses fiscal policy to close a recessionary gap, government
A) expenditure must be increased by more than the gap because of the government expenditure multiplier. B) taxes must be cut by more than the gap because of the tax multiplier. C) expenditure can be increased by less than the gap because of the government expenditure multiplier. D) taxes can be raised by less than the gap because of the tax multiplier. E) taxes must be raised by more than the gap because of the tax multiplier.
Economists James Buchanan and Gordon Tullock are well-known for developing
A) the concept of government failure. B) the voting paradox. C) the impossibility theorem. D) the public choice model.
Referring to the previous question, as a result of the consumer's adjustment to the change in the price of Y, assuming Y is a normal good and X and Y are complements, it is reasonable to expect that the amount of Y consumed will ________, and the
amount of X consumed will ________: A) increase; decrease B) decrease; decrease C) increase; increase D) cannot be determined; cannot be determined