What are the benefits of capital mobility?
What will be an ideal response?
The benefits include that investors can put financial capital where it earns the highest return, which raises welfare by putting capital in its most valuable use.
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Answer the next question using the following budget information for a hypothetical economy. All data are in billions of dollars. Government SpendingTax RevenuesGDPYear 1$800$825$4,000Year 28508504,200Year 39008754,350Year 49509004,500Year 51,0009254,600In which year is there a budget surplus?
A. Year 1 B. Year 2 C. Year 4 D. Year 5
Suppose the price level is unchanged and real GDP decreases. Then
A) nominal GDP must decrease. B) nominal GDP must remain unchanged. C) nominal GDP must increase. D) none of the above are true.
If the average total cost of producing 20 sweaters an hour falls when the firm doubles all its inputs, then the
A) short-run average total cost curve shifts upward because all inputs have increased. B) firm moves along its short-run average total cost curve. C) firm experiences economies of scale. D) long-run average cost curve shifts downward.
Suppose the economy is at full employment and firms become more pessimistic about the future profitability of new investment. Which of the following will happen in the short run?
A) The aggregate demand curve will shift to the right. B) Unemployment will rise. C) Prices will rise. D) Output will rise.