To increase future living standards by pursuing higher current rates of investment spending, an economy must
A. decrease the amount of future research and development spending.
B. reduce current rates of consumption spending.
C. reduce the current capital stock.
D. allow higher rates of current consumption.
Answer: B
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In macroeconomics, the long run is determined by:
A. how long it takes for prices of inputs to adjust through the whole economy. B. how long it takes for firms to vary all input quantities. C. the longest contract length of a business. D. how long it takes for output decisions to adjust to changes in economic conditions.
Which of the following Fed actions will increase the money supply?
A) open market purchases of Treasury notes B) an increase in the required reserve ratio C) an increase in the discount rate D) all of the above E) none of the above
In the long run, economic theory predicts that a monopolistically competitive firm will:
A. earn an economic profit. B. realize all economies of scale. C. equate price and marginal cost. D. have excess production capacity.
Holding other factors constant, if Congress passes a 5% investment tax credit under which a firm receives $5 in tax refunds from the government for every $100 it spends on new capital equipment, then the real interest rate will ________ and the equilibrium quantity of national saving and investment will ________.
A. increase; decrease B. increase; increase C. decrease; increase D. increase; not change