As a component of aggregate demand, investment refers to the
A) purchase of raw land for later resale
B) purchase of stocks and bonds
C) purchase of new equipment and additional inventories
D) difference between people's income and spending
E) dividends paid out to shareholders
Answer: C) purchase of new equipment and additional inventories
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In which industry is monopolistic competition most likely to be found?
A. mining B. agriculture C. retail trade D. utilities
In order to societies to reap the gains from trade, it is necessary to
A) define and enforce property rights. B) foster economic growth. C) distribute resources equally. D) achieve productive efficiency.
Which of the following is true of monopoly?
a. There are no barriers to entry. b. The firm is a price taker. c. There are no close substitutes for the product being produced. d. There are many firms in the industry. e. The firm faces a horizontal demand curve.
When countries have severe balance of payments difficulties caused by unsustainable current account deficits, they can approach the International Monetary Fund (IMF) for assistance. In providing financial assistance, the IMF generally insists that the country implement a series of policy changes designed to reduce the deficit. These programs are controversial as they tend to focus on demand reduction. Explain why demand reduction would solve a current account deficit problem. Would a program designed to increase the nation's gross domestic product (GDP) growth rate be a method of reducing a current account deficit? Why or why not?
What will be an ideal response?