(Consider This) What is the difference between financial investment and economic investment?
A. There is no difference between the two.
B. Financial investment refers to the purchase of financial assets only; economic investment
refers to the purchase of any new or used capital goods.
C. Economic investment is adjusted for inflation; financial investment is not.
D. Financial investment refers to the purchase of assets for financial gain; economic
investment refers to the purchase of newly created capital goods.
Answer: D
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
Most businesses probably claim they use cost-plus-markup pricing because
A) they are price takers. B) they are maximizing net revenue. C) they have no better way to explain their price-setting behavior. D) they are responsible for long-run inflation.
When the growth rates of actual and potential GDP diverge, they usually diverge because
A. actual GDP growth equals potential GDP growth. B. actual GDP growth falls below potential GDP growth. C. potential GDP growth rates fall below actual GDP growth rates. D. potential GDP growth rates fluctuate while actual GDP growth rates remain stable.
Most LDCs face the problems of low population growth and excessive saving
a. True b. False Indicate whether the statement is true or false