National Income and Economic Equilibrium

<p>It indicates that increasing labor leads to a higher output, though at a decreasing rate. (A)</p> Signup and view all the answers

<p>It results in a 10% increase in output. (C)</p> Signup and view all the answers

<p>Financial Markets (A)</p> Signup and view all the answers

<p>The mathematical expression relating the amount of output produced to quantities of capital and labor utilized. (A)</p> Signup and view all the answers

<p>The factors of production are assumed to be fixed in the model. (B)</p> Signup and view all the answers

<p>It decreases due to diminishing returns. (C)</p> Signup and view all the answers

<p>Marginal Revenue Product of Labor must equal the nominal wage. (B)</p> Signup and view all the answers

<p>Profit = Output Price × Output - Nominal Wage × Labor - Rental Price × Capital. (D)</p> Signup and view all the answers

<p>MPL must equal the real wage for profit maximization. (A)</p> Signup and view all the answers

<p>The marginal product of capital. (B)</p> Signup and view all the answers

<p>The firm should increase the number of workers. (C)</p> Signup and view all the answers

<p>Total output equals the sum of payments to factors. (A)</p> Signup and view all the answers

<p>Nominal wage times the number of workers. (C)</p> Signup and view all the answers

<p>The contribution of each input to total product (A)</p> Signup and view all the answers

<p>The change in consumption when disposable income increases by one dollar (C)</p> Signup and view all the answers

<p>T &lt; G (B)</p> Signup and view all the answers

<p>Investment is influenced by the expected revenue of projects compared to borrowing costs (B)</p> Signup and view all the answers

<p>The national income identity (A)</p> Signup and view all the answers

<p>When national savings equal investment (C)</p> Signup and view all the answers

<p>Real interest rates (C)</p> Signup and view all the answers

<p>S = Y - C - T (A)</p> Signup and view all the answers

<p>Output increases by less than double. (B)</p> Signup and view all the answers

<p>$MPL = \frac{ΔY}{ΔL}$ (B)</p> Signup and view all the answers

<p>The number of workers is unchanging. (A)</p> Signup and view all the answers

<p>Output increases at a decreasing rate as more labor is added, given a fixed level of capital. (B)</p> Signup and view all the answers

<p>Factor prices (wages and rental rates). (A)</p> Signup and view all the answers

<p>Doubling all inputs results in exactly double the output. (A)</p> Signup and view all the answers

<p>Total output is determined by the fixed factor supplies and the fixed state of technology. (B)</p> Signup and view all the answers

<p>Investment levels are likely to be very low, as there is no need to increase the capital stock. (B)</p> Signup and view all the answers

MPL is the change in output (ΔY) from an additional unit of labor (ΔL).

As labor increases, MPL decreases when capital is fixed, indicating diminishing returns.

Output increases in the same percentage as all input factors increase.

Output increases by a greater percentage than the input increase.

Output increases by a less percentage than the input increase.

The flow of income from firms to households through factor markets.

Prices per unit paid for labor and capital, determined by supply and demand.

Total output (Y) is determined by fixed supplies of capital (K) and labor (L): Y = F(𐤀K, 𐤀L).

An economy where individuals, firms, and government interact in three specific markets.

Markets where factors of production like labor and capital are bought and sold.

A mathematical relation showing how output is affected by inputs like labor and capital.

A measure of how efficiently production inputs are converted into outputs.

Factors influencing the total production in an economy including labor, capital, and technology.

Conditions under which production function operates, including fixed capital and labor.

A state where the quantity of goods supplied equals the quantity demanded.

Firms choose labour to maximize profit, balancing costs and benefits.

The slope of the production function, representing output change from hiring one more worker.

The extra revenue generated by hiring one additional worker, calculated as P × MPL.

Firms hire until MPL equals nominal wage (W).

The change in output from an additional unit of capital.

MPK decreases as the amount of capital increases.

Income splits among labour, capital, and economic profit based on their contributions.

In constant returns to scale, total factor payments equal total output when paid their marginal products.

A production function that shows the relationship between inputs and total product.

The change in consumption when disposable income increases by one dollar.

Y = C + I + G; it represents total output in an economy.

Describes how investment depends on the real interest rate.

Occurs when government spending (G) exceeds total taxes (T).

When national savings equal investment (S = I).

Nominal interest rate adjusted for inflation.

Assets available for borrowing and investing.