Question

 A xY = F (zK, zL) where x <z

 B  zY = F (zK, zL)

 C  yY =F (zK, zL) where y>z

1.  Which production function illustrates the case of constant returns to scale?

2.  Which production function illustrates the case of decreasing returns to scale?

3.  Which production function illustrates the case of increasing returns to scale?

    

 The costs of expected inflation include (choose one or more)

 A

 shoeleather cost

 B

 menu costs

 C

 variability in relative prices leading to microeconomic inefficiencies in the allocation of

 resources

 D

 (tax) bracket creep

 E

 the inconvenience of living in a world with a changing price level

 

 

 Here are three statements about seigniorage. Which are TRUE? (Choose one or more)

 A

 In the Middle Ages seigniorage was over and above brassage (a competitive charge for

 minting coins).

 B

 In the Middle Ages seigniorage was a source of revenue to the crown, claimed by the

 sovereign by virtue of his prerogative.

 C

 Today seigniorage is the revenue raised by the printing of money.

 D

 Today seigniorage is like a tax on the holders of money.

 E

 In the United States, seigniorage has usually accounted for less than 3 percent of

 government revenue.

 

 

 

Answer 1

1. Answer is (B) is constant return to scale because it show constant increase in output due to constant increase in input.

2. Answer is (C) is decreasing return to scale because higher input cause lower output incease y>z.

3. Answer is (A) is Increasing return to scale because increase in input by x result higher output by z where as given that z>x.

 

Answers are A, B, C and D because cost of expected inflation includes uncertinity about relative prices and resource allocation, Menu Cost, cost of reducing inflation and potential real income etc.

 

Answers are B, C and E seigniorage is source of revenue because its face value is less than its cost of production and today its use in form of currnecy notes because cost of printiing of notes is less than its face value.

USA is accounter for less than 3 percent of govenment revenue from seigniorge.