In the figure above, an economy would grow fastest if it produces at point
A) A.
B) B.
C) C.
D) D.
A
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In the short run, why does a production function eventually display diminishing returns to labor?
A) As a firm hires more workers the skills and the work ethic of the additional workers will eventually decline. B) The opportunity cost of hiring additional workers must eventually rise. C) As the number of workers increases eventually the gains from the division of labor and specialization are used up. D) As the number of workers increases it becomes difficult to monitor them.
Which of the following is inversely related to consumption spending?
a. Wealth b. Interest rates c. Disposable income d. Optimism about future income e. None of the above.
Those who favor passive policymaking argue that all of the following exist EXCEPT
A. pure competition is typical. B. the trade off between inflation and unemployment is not stable in the short run and is non-existent in the long run. C. aggregate demand shocks can influence real Gross Domestic Product (GDP) and unemployment. D. perfectly flexible wages and prices.
Most of the interest in using incentives arises due to uncertainty.
Answer the following statement true (T) or false (F)