All Else Equal,if There Are Diminishing Returns,then What Happens to Productivity

question 99

Multiple Choice

All else equal,if there are diminishing returns,then what happens to productivity if both capital and labor increase?

• A)Productivity will definitely fall.
• B)Productivity will definitely be unchanged.
• C)Productivity will definitely rise.
• D)None of the above are necessarily correct.

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Definitions:

Aggregate Supply

The total output of goods and services that producers in an economy are willing and able to supply at a given overall price level in a specified time period.

Price Levels

The midpoint of prices for every type of good and service produced economically.

Cost-Pull Inflation

Inflation caused by an increase in prices of inputs like labour, raw material, etc., leading to a decrease in the supply of these goods.

Demand-Pull Inflation

A sustained rise in the price level caused by a rightward shift of the aggregate demand curve.