For the capital stock to grow, production of capital goods must
a. exceed the inflation rate
b. exceed 15 percent of GDP
c. exceed the depreciation of existing capital
d. increase from the previous year
e. exceed the growth of the labor force
C
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The Hirschman-Herfindahl index (HHI) in an industry is 50. A merger is proposed that will raise the HHI to 100. In this case, the
A) Sherman Act will prohibit the merger. B) Federal Trade Commission will challenge the merger. C) Federal Trade Commission will not challenge the merger. D) rule of reason will prevent the merger if it represents a horizontal merger.
Creative destruction by innovation means
a. destruction of an innovative product once it fails in the market. b. introduction of an innovative product makes older substitute goods obsolete. c. substitute goods make innovative goods less competitive in the market. d. introduction of innovative goods increase the competition in the market
Financial intermediaries
A. Always allocate funds to the least productive investments. B. Transfer purchasing power from spenders to savers. C. Spread the risk of investment failure over many individuals. D. Increase search and information costs for savers and investors.
An international trade shock arising from a sudden increase in import demand is likely to be least disruptive to a country with
A. a floating exchange-rate system. B. a fixed exchange-rate system with sterilization. C. a surplus in the overall payment balance. D. a fixed exchange-rate system without sterilization.