Imagine an economy with production function Y = F(K) = and 400 units of capital. If the fraction of output invested in new capital is ? = 0.2, how much new capital will be created in the next period?
A. 2
B. 6
C. 8
D. 4
Answer: D. 4
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If a production quota is set below the equilibrium quantity, at the quota quantity, marginal benefit is ________ marginal cost and the level of production is ________
A) greater than; inefficient B) greater than; efficient C) less than; inefficient D) equal to; efficient
A tax cut intended to increase aggregate demand is an example of
A. Fiscal stimulus. B. Fiscal restraint. C. Fiscal targeting. D. Monetary restraint.
The Smoot-Hawley trade bill of 1930, designed to save jobs and increase revenue for the federal government, resulted in
A) the protection of jobs while maintaining the level of trade, but it did not increase federal revenues from tariffs. B) a decline in the volume of trade, but an increase in revenue from tariffs, which made it possible for the federal government to balance its budget. C) an increase in both employment and federal revenues from tariffs. D) a sharp reduction in trade and a decline in federal revenues from tariffs.
The chief difference between the M1 and M2 measures of the money supply is:
A. M2 includes assets with a lower liquidity than those in M1. B. M1 is a broader, more comprehensive measure. C. the supply of M1 exceeds the supply of M2. D. M2 excludes currency.