If depreciation (consumption of fixed capital) exceeds gross domestic investment, we can conclude that:
A. nominal GDP is rising but real GDP is declining.
B. net investment is negative.
C. the economy is importing more than it exports.
D. the economy's production capacity is expanding.
B. net investment is negative.
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
Consider the demand for labor in the computer chip industry. The demand for labor
A) is derived from the demand for computer chips. B) is shown by a perfectly elastic demand for labor. C) is shown by a perfectly inelastic demand for labor. D) has a demand curve that is backward bending.
To enhance social welfare, the government should encourage the production of
a. all goods b. no goods c. goods that provide positive externalities d. goods whose social cost exceeds their private cost e. goods that provide negative externalities
Based on the graph showing the effects of an investment tax credit or a technological change, a technological change that increases demand for loanable funds would lead to ______.
a. a shift in the demand curve for loanable funds to the left
b. a shift in the supply curve for loanable funds to the left
c. a decrease in loanable funds from Q2 to Q1
d. an increase in loanable funds from Q1 to Q2