Refer to the Following Figure When Answering the Following Questions

question 3

Multiple Choice

Refer to the following figure when answering the following questions.
Figure 11.5: IS Curve
-Consider Figure 11.5. If the economy initially is at its long-run equilibrium and the real interest rate decreases, the economy moves from point ________ to point ________.

• A) b; a
• B) d; a
• C) d; c
• D) c; d
• E) d; b

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Definitions:

Fixed Input

A resource or factor of production whose quantity does not change with the level of output in the short run.

MRC

Marginal Resource Cost, the cost of utilizing one additional unit of a resource or factor of production.

MRP

Marginal Revenue Product; the additional revenue generated from employing one more unit of a resource, commonly applied in economics.

Marginal Product

The additional output resulting from the use of one more unit of a production input, holding other inputs constant.