Which of the following is true?
a. The fraction of their total disposable income that households spend on consumption is called the marginal propensity to consume.
b. As the real interest rate falls, additional projects with lower expected rates of return become profitable for firms, and the demand for investment curve shifts right.
c. Firms with excess inventories of finished goods have an increased incentive to invest in new capital to put those inventories to productive use.
d. None of the above is true.
d
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Why is a bond considered to be a loan but a share of stock is not?
What will be an ideal response?
Opportunity cost refers to:
A. the amount of dollars that have to be spent in order to employ a resource. B. the cost of employing one more unit of a resource. C. a cost that a decision maker has already incurred. D. the cost associated with foregoing the opportunity to employ a resource in its best alternative use.
Firms in the market for dog food are selling in a purely competitive market. A firm producing dog food has an output of 10,000 pounds of dog food, for which it sells for $0.50 a pound. At the output level of 10,000 pounds the average variable cost is
$0.30, the average total cost is $0.70, and the marginal cost is $0.50. What would you expect the firm to do in the short run? The market in the long run? What will be an ideal response?
A severe and prolonged recession is called
A. a trough. B. a depression. C. a slump. D. a stagnation.