Which of the following is not crucial to the Harrod-Domar model?
a. population growth rate
b. marginal propensity to save
c. incremental capital-output ratio
d. marginal propensity to consume
e. all were crucial to the Harrod-Domar model
A
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Which of the following is an example of a fiscal policy?
A) The federal government increases income tax rates on people earning more than $250,000. B) The Federal Reserve takes action to greatly decrease the money supply. C) The Federal Reserve increases interest rates. D) Businesses begin to export and import more products and services.
Suppose I have $1,000 to put into a one-year CD. Community Bank offers 5 percent interest, Floatbank offers 5.25 percent, and Squidbank offers 5.40 percent. If I place my money in Squidbank, my economic profit on the investment is
a. 5.40 percent b. 5 percent c. 0.40 percent d. 0.15 percent e. -0.40 percent
If everyone knew in advance the exact rate of inflation:
A. the economy will have reached its long run equilibrium. B. borrowers would be discouraged when inflation will be low and lenders when inflation will be high. C. the risk of the breakdown of financial intermediation would increase. D. the exact rate of inflation wouldn't matter so much because people could prepare.
Suppose an oil cartel has an agreement to restrict members' production in order to maintain a price of $30 per barrel. A single cartel member may want to cheat and exceed its quota so that it can:
A. reduce its costs. B. charge higher prices. C. make demand more inelastic. D. earn a bigger profit.