Question

10) The relationship between the output produced in an economy, the input of factors of production, and the state of technological knowledge is called the A) aggregate supply function B) aggregate production function C) aggregate investment function D) marginal product of labor

11) Assume you deplete your savings to buy a new sofa and then take a vacation in a foreign country. Which of the following is true? A) consumption will increase B) net exports will increase C) government purchases will increase D) investment will increase

12) The aggregate demand and supply model in Chapter 5 A) differs in terms of underlying economics from the demand and supply model used in microeconomics B) uses the term "price" for the average price level of all the goods and services we buy C) uses an AS-curve that is vertical in the long run and horizontal in the very short run D) all of the above

Answer 1

10) The relationship between the output produced in an economy, the input of factors of production, and the state of technological knowledge is called the Production function of the economy. The production function of the economy shows the maximum output combination of the commodities produced by that economy, given its tehnological prcess of production, and the input combinations to produce those commodities.

Thus the correct option is B) aggregate production function.

11When i am buying a sofa from my savings, it is increasing my consumtion, (sofa being a durable commodity). When i an going to a foreign vacation, it would also increase mu consymtion. So, both my actions wold lead to the increase of my consumption.

Thus, the correct option is A) consumption will increase.