Economists often treat the economy's capital stock as fixed because
A. unless the interest rate changes, the capital stock doesn't change.
B. labor is a more important factor of production than capital, so economists ignore capital.
C. it takes a long time for new investment and the scrapping of old capital to affect the overall quantity of capital.
D. there is very little capital in the economy compared with the amount of labor.
Answer: C
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A point outside of the production possibility frontier is:
A. inefficient. B. impossible. C. efficient. D. on the contract curve.
Dave recently began running his father's farm. Last year he took in $15,000 in sales revenue and paid $10,200 in out-of-pocket costs. He made an economic loss last year:
a. if his implicit costs were $3000. b. if his implicit costs were $4000. c. if his implicit costs were $5000. d. In none of the above cases.
Other things the same, if the price level falls, domestic interest rates
a. rise, so domestic residents will want to hold more foreign bonds. b. rise, so domestic residents will want to hold fewer foreign bonds. c. fall, so domestic residents will want to hold more foreign bonds. d. fall, so domestic residents will want to hold fewer foreign bonds.
Refer to the diagram. The impact of the public sector on the equilibrium GDP:
A. is expansionary.
B. is contractionary.
C. is neutral.
D. cannot be determined from the information given.