Explain the ways in which the government can persuade private businesses to invest more in order to speed up the process of capital formation?
What will be an ideal response?
Real interest rates: The amount that businesses invest depends on the real interest rate they pay to borrow funds. The lower the real rate of interest, the more investment there will be.Tax provisions: The government also can influence investment spending by altering provisions of the tax code.Technical change: If the government can figure out how to spur technological progress, those same policies will probably boost investment.Growth of demand: Rapid growth itself can induce businesses to invest more. High levels of sales and expectations of rapid economic growth create an atmosphere conducive to investment.Political stability and property rights: Business executives contemplating a long-term investment want assurances that their property will not be taken from them for capricious or political reasons.
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The economy pictured in the figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; A B. recessionary; C C. recessionary; B D. expansionary; A
The study of factors that influence both international and interregional trade is referred to as
A) accidents of history. B) economic geography. C) factor abundance theory. D) weather analysis. E) centralized optimization.
If managers of a private corporation perform poorly, each owner has the option of
a. closing down the firm b. selling her share of the firm c. managing the firm herself d. paying no taxes on the little profit she does receive e. selling off the plant and equipment of the firm
Net utility is
a. equal to total utility from the quantity acquired of a good minus the utility lost by having to pay for it. b. equal to the sum of the marginal utilities. c. equal to an optimal number easily calculated by the consumer. d. always greater than total utility.