Distinguish between investment goods and consumption goods. If you buy a car, is it investment or consumption? What if IBM buys a car? Are inventories a consumption or investment good?
What will be an ideal response?
Investment goods include the purchase of capital by firms and the purchases of homes by households. A car purchased by an individual is consumption, a car purchased by IBM is an investment good. Inventories are counted as an investment good.
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The decay rate is the speed at which economic profits go to zero
Indicate whether the statement is true or false
A firm's demand for labor depends only on the price of labor
Indicate whether the statement is true or false
The reason why the price level does not change along the horizontal segment of the aggregate supply curve is because
a. the price increases for some goods are offset by the price decreases for other goods b. unused resources can be put to work without creating any upward pressure on prices c. the government fixed the price of resources so that they cannot increase in price when employment levels rise d. GDP rises rapidly so that the price level does not rise e. GDP rises slowly so that the price level does not rise
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the
Three-Sector-Model? a. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency falls. b. The quantity of real loanable funds per time period falls, and nominal value of the domestic currency rises. c. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency remains the same. d. The quantity of real loanable funds per time period falls, and nominal value of the domestic currency falls. e. There is not enough information to determine what happens to these two macroeconomic variables.