The Main Properties of a Neoclassical Aggregate Production Function Are

question 98

Multiple Choice

The main properties of a Neoclassical aggregate production function are ________ when all factors are increased proportionally and ________ when any one factor is increased on its own.

• A)increasing returns to scale; diminishing marginal returns
• B)constant returns to scale; diminishing marginal returns
• C)constant returns to scale; constant marginal returns
• D)decreasing returns to scale; diminishing marginal returns
• E)increasing returns to scale; increasing marginal returns

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Definitions:

Equation of Exchange

An economic formula representing the relationship between the money supply, its velocity, the price level, and the number of transactions in an economy: MV = PQ.

Economy Output

The total value of all goods and services produced by an economy over a specific time period, also known as gross domestic product (GDP).

Equation of Exchange

The Equation of Exchange is an economic identity that relates the supply of money in an economy to the value of goods and services transactions, commonly represented as MV = PQ.

Modern Monetarists

Economists who follow the beliefs of monetarism that emphasize the role of governments in controlling the amount of money in circulation to influence the economy.