The ____ is the situation in which the marginal product of labor is greater than zero and declining as more labor is hired
a. law of demand
b. law of diminishing supply
c. law of diminishing returns
d. law of returns to scale
c
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If one country can produce a good with fewer resources than another country, this is called:
a. specialization. b. geographic advantage. c. comparative advantage. d. absolute advantage. e. free trade.
Which of the following could not cause an increase in both the equilibrium price and quantity of a good exchanged? a. Increased input prices
b. Decreased incomes for an inferior good. c. An increase in the price of a substitute good. d. Increased tastes for the good.
The U.S. economy faced negative inflation: a. after World War II
b. during the dotcom bubble. c. during the Great Depression of the 1930s. d. after the real estate bubble burst.
According to classical economic theory
A. deficit financing is the only effective remedy for recession. B. fiscal policies are more effective than monetary policies as economic stabilization tools. C. if the economy is experiencing excessive inflation, the government should raise taxes and/or cut expenditures. D. falling wages and prices would be the natural cure to recession.