Assuming That the Supply of Labour Is Inelastic, Which of the Following

question 99

Multiple Choice

Assuming that the supply of labour is inelastic, which of the following factors will prevent diminishing returns in an economy?

• A) An increase in income tax rates.
• B) A fall in the quantity of capital employed per worker.
• C) An increase in the employment of capital.
• D) An increase in the amount of output used in the renewal of existing capital.

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Definitions:

Monetary Policy

The process by which the central bank or monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure economic stability and growth.

Aggregate Demand

Total need for every type of good and service within an economic system, quantified at a specific price level and during a certain timeline.

Money Supply

The complete volume of monetary resources present in an economy at a specific moment, which comprises cash, coins, and the amounts in checking and savings accounts.

Interest Rate

The percentage charged or paid for the use of money, typically expressed as an annual percentage of the principal.