Which of the following best expresses the law of diminishing returns?
A. Population growth automatically adjusts to that level at which the average product per worker will be at a maximum.
B. Because large-scale production allows the realization of economies of scale, the real costs of production vary directly with the level of output.
C. As successive amounts of one resource (labor) are added to fixed amounts of other resources (capital), beyond some point the resulting extra output will decline.
D. Proportionate increases in the inputs of all resources will result in a less-than-proportionate increase in total output.
Answer: C
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When the Fed engages in open market operations, it is buying or selling
A) loans made to banks to meet the legal reserve requirement ratio. B) gold. C) U.S. government securities newly issued by the U.S. Treasury. D) capital equipment. E) U.S. government securities.
When numerous Japanese companies buy $100,000,000 worth of goods or services from U.S. producers, ceteris paribus, there will be
A) appreciation in the value of the yen against the dollar. B) depreciation in the value of the yen against the dollar. C) depreciation of the dollar against the yen. D) no change in values of the currencies.
The demand for labor is:
a. derived demand. b. featherbedding demand. c. marginal utility demand. d. all of these.
Suppose a consumption function is given as C = $175 + 0.85YD. The marginal propensity to save is
A. -0.15. B. 0.15. C. 0.85. D. 200.