The Assumption That the Aggregate Production Function Exhibits Decreasing Returns

question 58

Multiple Choice

The assumption that the aggregate production function exhibits decreasing returns to capital (K) implies that a 5% increase in K will cause:

• A) no change in Y/N.
• B) a decrease in Y/N.
• C) a decrease in K/N.
• D) Y to increase by less than 5%.
• E) Y to increase by exactly 5%.

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Definitions:

Avoidance

A conflict management style in which the person pretends that a conflict doesn’t really exist.

Accommodation

A conflict management style in which the person plays down differences and highlights similarities to reduce conflict.

Avoidance

The act of keeping away from or preventing the occurrence of something undesirable.

Uncooperative

Characterized by a lack of willingness or refusal to work together with others in a collaborative or cooperative manner.