If firms receive an economic forecast predicting future increases in the growth of real GDP, they are likely to respond by
A) increasing their level of investment spending to increase future production capacity.
B) decreasing their level of investment spending to decrease current production capacity.
C) increasing their level of investment spending to increase current production capacity.
D) decreasing their level of investment spending to decrease future production capacity.
A
You might also like to view...
Other things constant, the price elasticity of demand for a product will tend to be smaller (more inelastic) if
a. people spend a large share of their income on the product. b. people spend an insignificant share of their income on the product. c. the population in the market area is large. d. there are many good substitutes for the product.
Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were:
A. zero and its economic loss was $200,000. B. $200,000 and its economic profits were zero. C. $100,000 and its economic profits were zero. D. $100,000 and its economic profits were $100,000.