How does investment in capital goods and infrastructure contribute to economic growth?
What will be an ideal response?
Capital goods (plant, equipment, tools) are needed by workers to be more productive. New investment in capital goods helps workers produce more goods and services per work hour, thus increasing labor productivity. Labor productivity is a key factor of economic growth. Infrastructure is also important because there is a need for public capital goods (highways, harbors, bridges, educational facilities) that help businesses and their workers get the job done sooner. For example, if the highway infrastructure is poor, it will be more difficult for businesses to get their products to market and it will require more work time on the part of their workers, thus reducing labor productivity.
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All industrialized countries have become “service economies” in recent decades. Explain the reasons behind this shift.
What will be an ideal response?
The demand for money increases and the demand for money curve shifts rightward if
A) the real interest rate increases. B) the inflation rate increases. C) the nominal interest rate increases. D) the price level falls. E) real GDP increases.
What are entitlements? How has the increase in the number of entitlements changed the budgetary process?
What will be an ideal response?
In the figure above, at the allocatively efficient level of computer production consumers are willing to give up
A) 0 televisions per computer. B) between 0 and 3 televisions per computer. C) 3 televisions per computer. D) more than 3 televisions per computer.