Assuming an Economy Is Initially at Potential Output, in the Long

question 100

Multiple Choice

Assuming an economy is initially at potential output, in the long run, an expansionary monetary policy is expected:

• A)not to affect output in the long run.
• B)not to affect output in either the short run or the long run.
• C)to affect output, but only in the long run.
• D)to affect output in both the short run and the long run.

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Definitions:

Marginal Product

The additional output generated by adding one more unit of a specific input, such as labor or capital, while holding other inputs constant.

Total Product

Total product refers to the total quantity of output produced by a firm within a given period as a result of inputs like labor and capital.

Average Product

The output per unit of input, calculated by dividing total product by the number of units of input.

Marginal Product

is the additional output that results from using one more unit of a particular input, holding other inputs constant.