When the marginal revenue product of an input is less than its price, the
a. producer should expand the use of that input.
b. price of the input will automatically rise in a free market.
c. producer should reduce the use of that input.
d. marginal physical product of that input must be below its average physical product.
c
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If there is no Ricardo-Barro effect, an increase in the government budget deficit
A) lowers the equilibrium real interest rate. B) decreases the demand for loanable funds. C) increases the supply of loanable funds. D) decreases the supply of loanable funds. E) raises the equilibrium real interest rate.
Assume the economy is in a recession and the Federal government decides to cut personal income tax rates. All else equal, the cut in tax rates should
A) increase consumption expenditures and cause real GDP to increase relative to potential GDP. B) increase the nominal interest rate and cause potential GDP to increase relative to real GDP. C) decrease the real interest rate and decrease expectations of inflation. D) increase the target interest rate and cause real GDP to fall relative to potential GDP.
By far, the best way to measure the standard of living of people in a country is the value of the country's GDP per capita
a. True b. False Indicate whether the statement is true or false
The principle that if the amount of labor and other inputs is held constant, then the greater the amount of capital in use, the less an additional unit of capital adds to production is called the principle of:
A. increasing returns to capital. B. diminishing returns to capital. C. decreasing output per unit of capital. D. increasing average capital productivity.