What must a company have to raise financial capital by reinvesting in the business?
a. Profits
b. An angel investor
c. A bank loan
d. Good business contacts
a. Profits
If firms are earning profits (their revenues are greater than costs), they can choose to reinvest some of these profits in equipment, structures, and research and development. For many established companies, reinvesting their own profits is one primary source of financial capital.
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Which of the following increases aggregate demand?
A) a decrease in taxes B) a decrease in foreign income C) a decrease in government expenditure D) a rise in the interest rate
Refer to Figure 11-14. Consider the following statements:
a. For each country, the marginal product per dollar spent on labor equals to the marginal product per dollar spent on capital. b. The price of labor is relatively higher in the United States than in China and the price of capital is relatively lower in the United States than in China. c. The price of labor and the price of capital are relatively higher in the United States than in China. Based on the figure, which of the statements above is true? A) All of the statements are true. B) statements b and c only C) statements a and c only D) statements a and b only
The view that decision-maker expectations are based on actual outcomes observed during the recent past is called the:
a. rational expectations hypothesis. b. adaptive expectations hypothesis. c. permanent income theory. d. recognition lag.
In Figure 4.2, the reason that the increase in output from point B to C is much greater than the increase in output from point C to D is that 
A. there is waste. B. small levels of production are often inefficient and that significant increases in production can occur thereafter at only a small additional cost. C. it is very difficult and very expensive to increase output once the capacity of the machinery has been reached. D. it always costs more money to increase output.