The short run aggregate production function is subject to ...

[rachel9]

The short run aggregate production function is subject to ________ if capital stock is increased, holding the total efficiency units of labor as constant.
 
  A) increasing returns to scale B) constant returns to scale
  C) decreasing returns to scale D) the Law of Diminishing Marginal Product

Question 2

Explain the two basic mechanisms that increase GDP per capita over the long term.
 
  What will be an ideal response?

[trampas]

Answer to Question 1

D

Answer to Question 2

The two basic mechanisms are capital deepening, meaning increases in an economy's stock of capital relative to its work force, and technological progress, which results in an economy operating more efficiently.