Which of the following would be included as investment in the GDP accounts?
a. the government buys goods from another country
b. someone buys stock in an American company
c. a firm increases its capital stock
d. All of the above are correct.
c
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An essentially classical feature in the supply-side perception of the saving-investment process is an emphasis on
a. income and, therefore, on aggregate demand. b. the importance of rates of return as influences on the rates of saving, investment, and thus capital formation. c. the inflation rate. d. money neutrality e. both b and d.
If the economy moves into recession, monetarists argue that the Fed should
A. Keep the money supply growing at a constant rate B. Keep the money supply fixed C. Increased the federal funds rate
?Exhibit 10A-1 Aggregate demand and supply model
Based on Exhibit 10A-1, when the aggregate demand curve shifts to the position AD2 and the economy is operating at point E2, the economy's position of long-run equilibrium corresponds to point:
A. E1. B. E2. C. E3. D. E1 or E3.
Suppose that additional units of capital affect the marginal productivity of labor. This is not unrealistic. Word processors increase the marginal productivity of secretaries. On the other hand, robotic equipment can completely replace a worker and, thereby, lower the marginal productivity of labor. Given this possibility, determine the conditions under which isoquants will not be convex (i.e.,
concave). What will be an ideal response?