please help 1). Why does spending on capital tend to increase economic growth mo
ID: 1225542 • Letter: P
Question
please help
1). Why does spending on capital tend to increase economic growth more than spending of consumption goods? Because
A.
capital lasts longer than consumer goods.
B.
capital can be used to produce future goods and services.
C.
capital puts technology to use.
D.
people prefer to invest in capital in order to generate income.
2). Initially 10 workers produce 100 units of output in an economy. The next year, 20 workers produce 250 units of output in the same economy. Productivity in the economy has [Hint: Productivity is total output divided by total workers]
A.
doubled.
B.
more than doubled.
C.
increased.
D.
decreased.
E.
not changed.
3). What is the "crowding out" effect?
A.
Consumption spending is reduced because of spending on capital
B.
Capital spending is reduced because people purchase great quantities of consumer goods
C.
Private investment is reduced because government borrowing diverts dollars away from private borrowers
D.
Savings is insufficient to support the level of capital investment in the economy
A.
capital lasts longer than consumer goods.
Explanation / Answer
1. OPTION B
2. OPTION C
3. OPTION C
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