Economists define investment as the purchase of
A) a new physical asset such as a new machine or a new house.
B) any physical asset, whether new or not, used by business to increase production.
C) any physical asset used by business to increase production and the repurchase of common stock.
D) business spending on capital and household spending on durable goods.
A
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The crowding out of consumer spending by an increase in taxes will be the greatest when
A) consumers would have spent the entire amount they now must pay in taxes. B) consumers would have saved the entire amount they now must pay in taxes. C) consumers would have spent only a fraction of the amount they now must pay in taxes. D) the government has a history of increasing taxes on a regular basis.
Conflicts of interest may arise within the credit rating agencies because
A) the investors pay the credit agencies for ratings. B) the issuers of debt securities pay the credit agencies for ratings. C) the credit rating agencies provide auditing services to issuers of debt securities. D) the credit rating agencies are involved in offering credit counseling to investors.
The view that individuals weigh all available evidence when they formulate their expectations about economic events (including information concerning the probable effects of current and future economic policy) is called
a. the adaptive expectations hypothesis. b. the permanent income hypothesis. c. the rational expectations hypothesis. d. the Phillips curve.
Along the IS curve, which of the following markets are in equilibrium?
A) the money and forex markets B) the goods and forex markets C) the goods and money markets D) the goods, money, and forex markets