Which Statements Do Economists NOT Agree On

question 61

Multiple Choice

Which statements do economists NOT agree on?

• A) Increases in the money supply shift aggregate demand to the right.
• B) In the long run, increases in the money supply increase prices, but not output.
• C) Recessions are associated with decreases in consumption, investment, and employment.
• D) Government should use fiscal policy to try and stabilize the economy.

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Definitions:

Diminishing Marginal Product

Diminishing marginal product occurs when adding an additional factor of production results in a lower increase in output, embodying the principle of decreasing returns.

Production Function

A mathematical representation of the relationship between inputs (like labor, capital) used in production and the output of goods and services that results from those inputs.

Fixed Costs

Fixed costs are expenses that do not change with the level of production or business activity.

Average-Fixed-Cost Curve

A graphical representation showing how the average fixed costs of production decrease as output increases, due to spreading fixed costs over a larger number of units.