Investment includes spending on
A) capital goods, buildings, and changes in business savings.
B) capital goods, buildings, and changes in business inventories.
C) capital goods, buildings, and consumer durable goods.
D) capital goods, consumer durable goods, and changes in business inventories.
B
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Suppose the Fed pursues a policy that leads to higher interest rates in the United States. How will this policy affect real GDP in the short run if the United States is an open economy? This policy
A) increases investment spending, consumption spending, and net exports, all of which increase GDP. B) reduces investment spending, consumption spending and net exports, all of which reduce GDP. C) reduces investment spending and consumption spending, both of which reduce GDP. Net exports rise which increases GDP. D) reduces investment spending and consumption spending, both of which reduce GDP. Net exports fall which increases GDP.
According to Robert Gordon (1969, 1999), the extraordinary expansion of physical production in 1942–45 was achieved by
(a) massive government investment in new plants and equipment. (b) finally bringing into production manufacturing plants and equipment that had been idle since the early 1930s so that big government investment was not necessary. (c) the Federal Reserve's peg on the bond market, which enrolled the private sector to mobilize the necessary capital to invest in new plant and equipment. (d) none of the above.
An increase in the relative price of a good cannot be caused by
A) an increase in the nominal price of the good that is greater than the increase in the nominal price of the other good. B) a decrease in the nominal price of the good that is less than the decrease in the nominal price of the other good. C) a decrease in the nominal price of the other good while the price of the good itself remains constant. D) an increase in the nominal price of the other good while the price of the good itself remains constant.
If the Fed responds to an increase in government spending with the goal of stable prices and output, which of the following would be the result?
a. A larger multiplier effect than normal b. Partial crowding out c. An increase in consumption and investment spending d. No crowding out e. Complete crowding out