Refer to the Graph Shown

question 32

Multiple Choice

Refer to the graph shown. The output range in region a is associated with:

• A)increasing marginal productivity.
• B)constant returns to scale.
• C)economies of scale.
• D)diseconomies of scale.

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Definitions:

Nominal Interest Rate

The interest rate as usually reported without a correction for the effects of inflation.

Real Interest Rate

The nominal interest rate adjusted for inflation, reflecting the true cost of borrowing or the true yield on an investment.

Inflation

The rate of growth in the average price of goods and services, which leads to a decline in the power of currency to buy goods.

Money-Supply Curve

A graphical representation showing the relationship between the quantity of money in the economy and the price level or interest rate.