Fixed investment includes all of the following except:
a. all purchases by businesses that add to their inventories
b. all spending on capital goods.
c. all spending on producer goods.
d. all spending on goods that increase future production capabilities.
Answer: a. all purchases by businesses that add to their inventories
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In the United States, the bulk of health care spending is paid by health insurance companies
Such a system is also called a third-party payer system where consumers of health care pay a nominal fee and the rest are paid by the health insurance provider. Why might such a system lead to an inefficient outcome? A) Consumers fearing that excessive use of health care services may lead to a rise in insurance premiums tend to under-consume health care services. B) Health insurance companies have an incentive to control cost and therefore tend to deny consumers many cutting edge medical treatments. C) Consumers have an incentive to over-consume health care services because they pay prices well below the cost of providing these services. D) Physicians concerned that insurance companies may not approve payments tend not to order expensive tests for their patients.
A Nash equilibrium is:
A. an outcome in which all players choose the best strategy they can, given the choices made by all of the other players. B. when one strategy is always the best for a player to choose, regardless of what other players do. C. an outcome in which all players follow a "leader" in order to maximize profits. D. None of these statements is true.
If we assume that a unit of capital will last indefinitely, the marginal rate of return on investment equals the marginal revenue product of capital divided by its marginal resource cost
a. True b. False
Use the aggregate expenditures model and assume an economy is in equilibrium at $5 trillion which is $250 billion below full-employment GDP. If the marginal propensity to consume (MPC) is 0.60, full-employment GDP can be reached if government spending:
a. decreases by $60 billion. b. decreases by $100 billion. c. decreases by $250 billion. d. is held constant.