As more workers are hired, the marginal physical product of labor eventually declines because
A) less efficient workers are hired as the number of workers increases.
B) workers do not work well together when the number of workers increases.
C) the amount of capital each worker has to work with declines as the number of workers increases.
D) of diseconomies of scale.
Answer: C
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
Which of the following expresses the equation of exchange?
A. MP = VY B. MV = PY C. MV = Y D. MY = PV
The Consumer Price Index was 247 in year 1 and 272 in year 2. The rate of inflation in year 2 was:
a. 12 percent b. 6 percent c. 10 percent d. 8 percent
Government expenditures are different from the government national income account (G) in that:
A. government expenditures includes transfer payments while G does not. B. government expenditures are net of tax revenue while G is not. C. G includes transfer payments while government expenditures does not. D. G includes spending for defense, highways, and education while government expenditures does not.