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DECREASING MARGINAL RETURNS: In the short-run production of a firm, an increase in the variable input results in a decrease in the marginal product of the variable input. Decreasing marginal returns typically surface after the first few quantities of a variable input are added to a fixed input. Compare this with increasing marginal returns. You should also compare this with diseconomies of scale associated with long-run production.
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Lesson 12: Business Cycles | Unit 5: Policies
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Page: 23 of 26
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Stabilization policies try to avoid or correct the problems caused by business cycle instability.- The two most popular are fiscal policy and monetary policy.
- Do nothing 'nonpolicies' might be best in some cases, but are seldom used because people often demand immediate solutions to problems.
- Business cycle instability is indicated by the red line rising above and falling below the long-run trend line.
- The flatter, smoother line is the goal of stabilization policy, to limit business cycle instability.
- Stabilization policies can be either expansionary or contractionary.
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DERIVATION, PRODUCTION POSSIBILITIES CURVE A production possibilities curve, which illustrates the alternative combinations of two goods that an economy can produce with given resources and technology, is often derived from a production possibilities schedule. This derivation involves plotting each bundle from the production possibilities schedule as a point in a diagram measuring the two goods on the vertical and horizontal axes.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time browsing through a long list of dot com websites trying to buy either a velvet painting of Elvis Presley or a wall poster commemorating yesterday. Be on the lookout for crowded shopping malls.
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This isn't me! What am I?
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Francis Bacon (1561-1626), a champion of the scientific method, died when he caught a severe cold while attempting to preserve a chicken by filling it with snow.
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"Do what you feel in your heart to be right ‚ for you'll be criticized anyway. You'll be damned if you do and damned if you don't. " -- Eleanor Roosevelt, first lady
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PSBR
Public Sector Borrowing Requirement
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