Investment in capital goods only makes sense when
a. the capital goods can be used to increase the future output of consumption goods.
b. the savings rate of a country is low.
c. the interest rate is high and people have a positive rate of time preference.
d. economies are organized along capitalist lines.
A
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If the two goods in an Edgeworth Box are perfect complements for one person and perfect substitutes for the other, then all efficient allocations are such that the first person has the same amount of good 1 as of good 2.
Answer the following statement true (T) or false (F)
Mike has just been laid off from his construction job because consumers are not purchasing new homes because of the recession. Mike would be considered to be part of
A) structural unemployment. B) cyclical unemployment. C) seasonal unemployment. D) frictional unemployment.
How do households make saving decisions?
What will be an ideal response?
Suppose that in a certain market there is an increase in demand, but the market price does not quickly adjust to a new equilibrium price. What situation will exist in this market until the price adjusts?
A. Excess demand, because the market price is higher than the equilibrium price B. Excess supply, because the market price is higher than the equilibrium price C. Excess demand, because the market price is lower than the equilibrium price D. Excess supply, because the market price is lower than the equilibrium price.