Large Disparities in Wages Are Often Used As

question 8

Multiple Choice

Large disparities in wages are often used as:

• A)evidence of the importance of profit maximization.
• B)a means to question the validity of the marginal productivity theory of income distribution.
• C)evidence of diminishing returns.
• D)evidence to illustrate the absence of market failures in factor markets.

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Definitions:

Aggregate Demand

The combined requests for goods and services across an economy, factoring in the prevailing price level for a set period.

Government Purchases

Expenditures made by the government for goods and services that directly satisfy public needs or are used to produce other goods and services.

Planned Aggregate Expenditures

The total planned spending in an economy, including consumption, investment, government purchases, and net exports at a given level of income.

Net Taxes

The difference between total taxes levied by the government and the total transfer payments and subsidies it pays out.