In the Neoclassical Growth Model,the Law of Diminishing Marginal Returns

question 45

Multiple Choice

In the Neoclassical growth model,the law of diminishing marginal returns implies that capital accumulation leads to ever

• A)larger decreases in GDP and large decreases in living standards.
• B)larger increases in GDP but smaller decreases in living standards.
• C)smaller increases in GDP and living standards.
• D)larger levels of unemployment but small increases in the standard of living.
• E)larger levels of unemployment but larger increases in the standard of living.

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Definitions:

Output

Refers to the total amount of goods or services produced by a firm or economy over a specific period.

Marginal Revenue Product

This term refers to the additional revenue generated from using one more unit of input, illustrating the contribution of that unit to the total output's revenue.

Last Unit

Refers to the final item or unit produced or consumed, which can be significant in determining the marginal cost or utility.

Labor Employed

The total number of workers who are currently hired and working in a given sector or economy.