Diminishing marginal returns occurs when:
a. the marginal product of a variable input diminishes with each additional unit of the input.
b. the marginal product of a variable input increases with each additional unit of the input.
c. the marginal product of a fixed input diminishes with each additional unit of the input.
d. the marginal product of a fixed input increases with each additional unit of the input.
a
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The main policy designer of the Federal Reserve system is the
A) 12 district banks. B) President and Congress. C) Federal Open Market Committee. D) Council of Economic Advisors.
Suppose a perfectly competitive increasing-cost industry is in long-run equilibrium when market demand suddenly increases. What happens to the typical firm in the long run?
a. It experiences no change from the original equilibrium b. It experiences a higher average total cost and equilibrium price c. It experiences a lower average total cost and equilibrium price d. It experiences the same equilibrium price but a greater average total cost e. It experiences the same equilibrium price but a lower average total cost
Which of the following defines the "unit of account" function of money?
a. A common measurement of the relative value of different goods and services. b. The ability of money to hold value over time. c. The materials used to manufacture money are of medium grade or quality, so that people will not hoard money for its commodity value. d. Money is widely accepted in exchange for goods and services.
If severe demand-pull inflation was occurring in the economy, proper government policies would involve a government:
A. deficit, the purchase of securities in the open market, a higher discount rate, and higher reserve requirements. B. deficit, the sale of securities in the open market, a higher discount rate, and lower reserve requirements. C. surplus, the sale of securities in the open market, a higher discount rate, and higher reserve requirements. D. surplus, the purchase of securities in the open market, a lower discount rate, and lower reserve requirements.