When a country continually adds more capital to its existing stock productivity will:
A. decrease at a decreasing rate.
B. decrease at an increasing rate.
C. increase at an increasing rate.
D. increase at a decreasing rate.
Answer: D
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Suppose that the economy is in long-run equilibrium and the government decided to engage in expected expansionary policy by increasing the money supply
If we assume rational expectations, which of the following statements is correct about the effect of expansionary policy in the long run? A) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will decrease. B) The unemployment rate will increase, real GDP will increase and the price level will increase. C) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will increase. D) The unemployment rate will decrease, real GDP will decrease and the price level will decrease.
If a firm used a combination of inputs that was to the left of its isocost line, it would indicate that
A) it is exceeding its budget. B) it is not spending all of its budget. C) it is operating at its optimal point because it is saving money. D) None of the above
A good is said to be a normal good when
a. decreases in income lead to an increase in demand for the good b. decreases in income lead to a decrease in demand for the good c. increases in income lead to a decrease in demand for the good d. increases in price lead to a decrease in the quantity demanded of the good e. increases in price lead to a decrease in demand for the good
When diminishing returns set in, total output begins to decrease
Indicate whether the statement is true or false