If the boat industry produced $20 billion worth of boats, but $50 billion worth of boats were sold to consumers, the decrease in inventory would lead to
a. an increase in the nation's capital
b. more individuals investing in the automobile market
c. a decrease in the nation's capital stock
d. fewer individuals buying cars
e. an overestimation of boat production
C
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Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). b. The GDP Price Index and net nonreserve-related international borrowing/lending remain the same. c. The GDP Price Index falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). d. The GDP Price Index rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). e. The GDP Price Index rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
At equilibrium, if quantity supplied is 16, quantity demanded
A. is less than 16. B. is 16. C. is more than 16. D. cannot be found without more information.
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.
If the marginal propensity to consume is 0.6, the marginal propensity to save is
A) 0.4. B) 0.6. C) 1. D) 1.5.