Explain the difference between diminishing returns to labor and diminishing marginal returns to labor
What will be an ideal response?
Diminishing returns to labor means that an increase in the number of labor units will decrease the amount of output. Diminishing marginal returns means that additional units of labor increase output at a decreasing rate.
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The above table gives data for the nation of South Hampton. There are no imports into or exports from South Hampton. Aggregate planned expenditure is less than actual expenditure if real GDP is
A) $700 billion. B) more than $700 billion. C) less than $700 billion. D) at the equilibrium level. E) Both answers A and C are correct.
The people of the Island of Yap used stones as a general medium of exchange. Therefore,
A) their economic system was based upon barter. B) their stones served as money. C) they had no price system, because prices can't be measured with stones. D) inflation was impossible.
What is the difference between an invention and an innovation?
What will be an ideal response?
If the central bank targets a monetary aggregate, it is likely to lose control over the interest rate because
A) of fluctuations in the demand for reserves. B) of fluctuations in the consumption function. C) bond values will tend to remain stable. D) of fluctuations in the business cycle.