National income accountants define investment to include:
a) any increase in business inventories.
b) the addition of cash to a savings account.
c) the purchase of common or preferred stock.
d) the purchase of any durable good, for example, an automobile or a refrigerator.
a) any increase in business inventories.
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Adverse selection:
A. occurs when buyers and sellers have different information about the riskiness of a situation. B. can result in failure to complete transactions that would have been possible if both sides had the same information. C. refers to the tendency for people with higher risk to be drawn toward insurance. D. All of these statements are true.
To promote economic efficiency, government should
A. keep all prices as low as possible. B. keep all prices high so that people will save more money. C. allow the market to set low prices for abundant goods and high prices for scarce goods. D. never interfere with firms’ price setting powers.
The intention of a price floor is to help producers by setting a higher than equilibrium price. What is one unintended consequence of this policy?
A. There is more scarcity in the economy. B. Economic surplus decreases. C. Consumer surplus increases. D. Producer surplus increases.
According to the new growth theory
What will be an ideal response?