The law of diminishing returns means that
a. total output will increase, but at a diminishing rate
b. marginal product will increase, but at a diminishing rate
c. total cost will increase, but at a diminishing rate
d. total revenue will increase, but at an increasing rate
e. total output will decrease
A
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According to benefit-cost analysis
a. identification of the “acceptable” risk level is based on the criterion of allocative efficiency b. the efficient risk level is found where the MSB and MSC of risk reduction are equal c. the risk level associated with the maximum difference between TSB and TSC of risk reduction is allocatively efficient d. all of the above e. none of the above
Due to the existence of the FDIC, banks
A) have not changed their behavior even with the existence of insurance. B) are no longer concerned about net worth. C) become more cautious in making loans. D) may make riskier loans knowing that their depositors are insured.
The effects of tax incentive programs such as IRAs and 401(k) accounts suggest that these government programs designed to increase saving lead to
A) a decrease in the private capital stock. B) decreased labor productivity. C) an increase in the standard of living. D) an increase in the real interest rate.
The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.