Consider Comparing the Relationship Between Marginal and Average Product $\mathrm { AP } _ { \mathrm { L } }$

question 62

True/False

Consider comparing the relationship between marginal and average product. When average product is increasing in labor, marginal product is greater than average product. That is, if $\mathrm { AP } _ { \mathrm { L } }$ increases in $\mathrm { L }$ , then $\mathrm { MP } _ { \mathrm { L } } > \mathrm { AP } _ { \mathrm { L } }$ .

Understand how government budget deficits impact the open economy, including effects on real interest rates, domestic investment, and trade balance.

Comprehend the relationship between tax credits for investment and shifts in the demand for loanable funds and supply of dollars in the foreign-currency exchange market.

Recognize the effects of capital flight on demand for loanable funds, supply of dollars, and net capital outflows in the foreign-currency exchange market.

Analyze the impact of a government default on its debt on the country's real interest rates and currency valuation in the open-economy macroeconomic model.

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