Which of the following best defines capital as a factor of production?
A) the gifts of nature that businesses use to produce goods and services
B) the knowledge and skills that people obtain from education and use in production of goods and services
C) financial assets used by businesses
D) instruments, machines, and buildings used in production
D
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
According to the quantity theory of money, if the money supply grows at 20 percent and real GDP grows at 5 percent, then the inflation rate will be
A) 15 percent. B) 20 percent. C) 25 percent. D) 100 percent.
If demand rises and supply rises, equilibrium price will _____ and equilibrium quantity will _____.
Fill in the blank(s) with the appropriate word(s).
Which of the following is not a function performed by the Federal Reserve?
a) To clear checks. b) To maintain the money supply. c) To establish more effective supervision of the banking system in the United States. d) To keep interest rates low.