1. Due to the presence of diminishing returnsto capital, doubling the amount of
ID: 1231597 • Letter: 1
Question
1. Due to the presence of diminishing returnsto capital, doubling the amount of physical capital available forone worker to use will _______. (Points: 1)decrease output by less than a factor oftwo
increase output by lessthan a factor of two
increase output by exactlya factor of two
increase output by morethan a factor of two
2. From the standpoint of economic growth,banks are important to ______. (Points: 1)
fight inflation
keep interest rateslow
channel savings intoinvestment
channel investment intosavings
3. Economies with higher growth rates tend tobe those that _______. (Points: 1)
have large amounts ofnatural resources
have a stable governmentthat protects property rights
have high levels ofgovernment regulation
have all of theabove
Explanation / Answer
1. Due to the presence of diminishing returnsto capital, doubling the amount of physical capital available forone worker to use will _______. (Points: 1) decrease output by less than a factor oftwo increase output by less than a factor of two - even thoughdouble amount of capital will increase ouput, but not byproportional amount increase output byexactly a factor of two increase output by morethan a factor of two 2. From the standpoint of economic growth,banks are important to ______. (Points: 1) fightinflation keep interest rateslow channel savings into investment -only way tomake money channel investment intosavings 3. Economies with higher growth rates tend tobe those that _______. (Points: 1) have large amounts ofnatural resources have a stable governmentthat protects property rights have high levels ofgovernment regulation have all of the above - allcould make difference as to prevent social cost(incresing)
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