Investments in both physical and human capital enhance economic growth because they:
A. increases consumption during the current period.
B. makes it possible for individuals to produce more goods and services per hour worked.
C. encourages firms to expand output by employing more low-productivity workers.
D. encourages workers to unionize and, thereby, fight for higher wages.
Answer: B
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Mr. Jones, an elderly man living on his retirement, pulls $100,000 from certificates of deposit (CDs), which were returning an annual rate of return of 5%
He thinks the credit freeze is over and stock markets are headed up, but ends up losing 40% in his first year of investing. What was Mr. Jones's rate of economic profit? A) 5% B) 35% C) -35% D) -40% E) -45%
If, in a competitive market, marginal benefit is greater than marginal cost
A) the quantity sold is less than the equilibrium quantity. B) the net benefit to consumers from participating in the market is greater than the net benefit to producers. C) the government must force producers to lower price in order to achieve economic efficiency. D) the quantity sold is greater than the equilibrium quantity.
An increase in inflationary expectations __________ interest rate
A) raises the natural B) raises the nominal C) lowers the natural D) lowers the nominal
If the marginal propensity to consume = 0.75, then:
a. the marginal propensity to save = 0.75. b. the marginal propensity to save = 1.33. c. the marginal propensity to save = 0.20. d. the marginal propensity to save = 0.25. e. since the marginal propensity to save and the marginal propensity to consume are unrelated, we cannot determine the marginal propensity to save from the information given.