When New Technologies Are Applied to the Production and Distribution

question 56

Multiple Choice

When new technologies are applied to the production and distribution of goods and services:

• A)scarcity is eliminated.
• B)diminishing returns to capital no longer hold.
• C)diminishing returns to capital still hold.
• D)average labor productivity decreases.

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Definitions:

Capital Goods

Long-lasting goods that are used in the production of other goods and services, such as machinery, buildings, and equipment.

Consumables

Items or products that are intended to be used up and replaced.

Inflationary Premium

The component of interest rates or yields on financial instruments that compensates investors for the anticipated erosion of purchasing power due to inflation.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money they borrow from a lender.