How are technological advance and capital formation related?
Please provide the best answer for the statement.
Technology usually promotes capital investment, encouraging purchases of new machinery and equipment. Also, capital formation usually involves technological advance, as new purchases are usually of better technology and thus bring an industry into a faster, more efficient capacity. In this way, technology and capital formation go hand in hand.
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Private entrepreneurs are likely to make better investment decisions than central planners because
What will be an ideal response?
The higher the marginal propensity to consume
A. the smaller the spending effect will be. B. the bigger the incentive effect will be. C. the smaller the incentive effect will be. D. the bigger the multiplier effect will be.
Janet Yellen, Chair of the Federal Reserve, must choose whether tomorrow she meets with the Secretary of the Treasury or with the Congress regarding the financial crisis. This choice reflects the
A) fact that Ms. Yellen faces scarcity. B) concept of entrepreneurship. C) fact that Ms. Yellen responds to incentives. D) use of capital.
Refer to the above figure. If the relevant aggregate demand curve was AD2, the government could do all of the following to close the existing gap EXCEPT
A) increase government spending on roads. B) reduce marginal tax rates. C) reduce corporate taxes. D) reduce defense spending.