If the US Government Increases Its Expenditures (Without Any Change in Taxes)and

question 16

Multiple Choice

If the U.S. government increases its expenditures (without any change in taxes) and at the same time the Federal Reserve Bank increases the money supply, the AD curve would:

• A)shift to the left.
• B)shift to the right.
• C)become flatter.
• D)become steeper.

Understand the concept of the law of diminishing returns and its application to real-world scenarios.

Comprehend the relationship between marginal product and factors contributing to productivity such as labor and technology.

Grasp the Malthusian dilemma and its implications on food production and population growth.

Analyze the impact of technological improvements on productivity and understand the potential for diminishing returns in technology applications.

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Definitions:

Constant Returns to Scale

A situation in production where increasing all inputs by a certain proportion results in output increasing by the same proportion.

Price-taker Industry

Industries where firms have no control over the market price and must accept the prevailing prices as given.

Short-run Market Supply

The total quantity of goods or services that producers are willing and able to sell at a given price in the market over a short period.

MC Curves

A graphical representation of how the marginal cost of producing one additional unit of a good varies with the quantity produced.