Diminishing returns, so that each additional hour of labor employed produces successively smaller additional amounts of real GDP, exist because
A) additional workers are paid higher wage rates.
B) labor is not very productive.
C) extra labor produces more output.
D) all other factors are held fixed.
E) the price level rises as more workers are employed.
D
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Which of the following assumptions is made while determining equilibrium wage and labor employed in the economy?
a. Information about job vacancies is difficult to obtain for workers. b. Mobility of workers is limited, i.e., workers can not switch jobs easily. c. Jobs vary widely in scope and responsibilities. d. All person-hours of labor are treated as identical.
If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run, the economy would experience
A) stagflation. B) long-run economic decline. C) hyperinflation. D) an increase in the natural rate of unemployment.