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Suppose the sum of consumption, investment, and government spending is $620 billion, where investment includes involuntary inventory accumulation of $2 billion in addition to expenditure on plant and equipment, and government spending includes $5 billion interest payments on the national debt, $5 billion unemployment insurance payments, $10 billion social security payments, $2 billion in salaries to elected politicians, $14 billion in salaries to government employees and $25 billion expenditure on goods and services produced by the private sector. If we imported $3 billion more than we exported, measured GDP by the adding expenditures method is
a) $600b or less
b) more than $600b but not more than $610b
c) more than $610b but not more than $620b
d) more than $620b
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Explain what the quote, "Too many cooks spoil the pot" has to do with the law of diminishing marginal returns.
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