The idea that the production function exhibits _______ implies that ________
A) diminishing returns; the Lucas Wedge increases at output increases
B) diminishing returns; each additional unit of labor employed generates an ever-decreasing amount of real GDP
C) increasing returns; potential GDP is always increasing
D) increasing returns; output should increase steadily as technology grows
E) constant returns; each additional unit of labor employed generates an increasing amount of real GDP
B
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The fact that a gallon of gasoline commands a higher market price than a gallon of water indicates that:
a. gasoline is an economic good but water is not. b. the marginal utility of gasoline is greater than the marginal utility of a gallon of water. c. the average utility of a gallon of gasoline is greater than the average utility of a gallon of water. d. the total utility of gasoline exceeds the total utility of water.
A country that exhausts its foreign exchange reserves and then resorts to devaluation may be said to have
a. adjusted its exchange rate b. imposed import controls c. imposed exchange controls d. borrowed currencies in the foreign exchange market e. borrowed foreign currencies from the IMF