One of the main determinants of real GDP per person is the growth of capital per person. Which of the following variables does NOT determine the growth of capital per person in the long run?
A) average saving rate
B) output-to-capital ratio
C) marginal tax rate on investment
D) depreciation rate
A
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When government outlays exceed tax revenues, does the government have a budget deficit or surplus?
What will be an ideal response?
The price of lemonade is $0.50; the price of popcorn is $1.00. If Fred has maximized his utility by purchasing lemonade and popcorn, his marginal rate of substitution will be:
A) 2 lemonades for each popcorn. B) 1 lemonades for each popcorn. C) 1/2 lemonade for each popcorn. D) indeterminate unless more information on Fred's marginal utilities is provided.
The fact that the supply curve for a given firm's bond is vertical reflects the fact that
a. at any given point in time there are a fixed number of those bonds in existence. b. firms adjust the number of bonds they issue on a daily basis c. investors do not adjust their portfolios when interest rates change d. government limits the amount of bonds a company can issue
If potential output equals 3,000 and short-run equilibrium output equals 3,500, there is a(n) ________ gap and the Federal Reserve must ________ real interest rates in order to close the gap.
A. expansionary; raise B. recessionary; not change C. recessionary reduce D. recessionary; raise