The Idea That the Production Function Exhibits_{-------------}implies That_{-------------}

question 95

Multiple Choice

The idea that the production function exhibits_{-------------}implies that_{-------------}

• A)increasing returns; potential GDP is always increasing.
• B)constant returns; each additional unit of labor employed generates an increasing amount of real GDP.
• C)diminishing returns; each additional unit of labor employed generates an ever-decreasing amount of real GDP.
• D)increasing returns; output should increase steadily as technology grows.
• E)diminishing returns; the Lucas Wedge increases at output increases.

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Definitions:

Benefits Principle

The benefits principle is a taxation theory that argues taxes should be levied on individuals according to the benefits they receive from government services.

Public Education

A universally accessible system funded and administered by government agencies aiming to provide free education to all children.

Property Taxes

Levies on property ownership, typically based on the property's value, used to fund local services such as schools, roads, and public safety.

Progressive Tax System

A taxation system where the tax rate increases as the taxable income increases, considered more equitable by distributing the tax burden according to ability to pay.