Describe the relationship between the marginal and average products of labor as the employment of labor increases in the short run
What will be an ideal response?
Holding other factors such as capital constant, additional workers have increasing and then diminishing marginal returns. So, the marginal product of additional workers rises and then falls, even though remaining positive. As that happens, when the marginal product is greater than the average product, the average product is increasing. When the marginal product is less than the average product, the average product is decreasing. The average product equals the marginal product when the average product is at its maximum.
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If the Fed chooses to target the money supply, it
a. cannot at the same time control the interest rate b. can only do so if the interest rate is targeted as well c. gives up the opportunity of determining the legal reserve requirement d. gives up the opportunity of determining the discount rate e. gives up the opportunity of determining the federal funds rate
In which quarter of which year did the prosperity phase of the business cycle begin?
