An increase in the investment rate results in:
A) a lower steady-state capital stock and a lower steady-state output.
B) a lower steady-state capital stock but a higher steady-state output.
C) a higher steady-state capital stock and a higher steady-state output.
D) a higher steady-state capital stock but a lower steady-state output.
Answer: C) a higher steady-state capital stock and a higher steady-state output.
You might also like to view...
An increase in the government budget deficit will not lead to a current account deficit if domestic investment declines
Indicate whether the statement is true or false
Given the reserve-holding ratio e and the fraction of deposits held as cash c, the deposit multiplier becomes
A) e - c. B) 1/(e - c). C) e/c. D) ec. E) 1/(e + c).
The precautionary demand for holding money is when people hold money:
a. instead of near money. b. to transact purchases they expect to make. c. as insurance against unexpected needs. d. to speculate in the stock market. e. to take advantage of changes in interest rates.
Returns to scale refers to
A. what happens to output when all inputs are varied in some proportion. B. what happens to output when all inputs are held fixed. C. the law of diminishing returns. D. what happens to output when at least one input is fixed and one is varied.