What is unplanned investment? How does it occur?
What will be an ideal response?
Unplanned investment occurs when inventories grow larger than planned. The difference between the actual change in inventories and the planned change is unplanned investment. Unplanned investment occurs when aggregate planned expenditure is less than real GDP so firms sell less output than they had planned.
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Refer to the scenario above. Using 2012 as the base year, what is the real GDP of the economy in 2013?
A) $49,500 B) $55,000 C) $47,000 D) $56,000
If you purchased a newly issued 30-year bond from American Airlines with a face value of $1,000 and a coupon payment of 3 percent, American Airlines would pay you
A) $33.33 per year plus 3 percent per year for 30 years. B) $30 per year for 30 years. C) $30 per year for 30 years plus $1,000 at the end of the 30th year. D) $33.33 per year for 30 years plus $1,000 at the end of the 30th year.
Consider a downward-sloping demand curve. When the price of an inferior good decreases, the income and substitution effects
A) work in the same direction to increase quantity demanded. B) work in the same direction to decrease quantity demanded. C) work in opposite directions and quantity demanded increases. D) work in opposite directions and quantity demanded decreases.
A natural monopoly is created by
a. a patent b. nature c. substantial economies of scale d. government regulation e. control of scarce inputs