To determine the change in the capital stock, the level of new investment must be adjusted for depreciation because some new investment:
A. is not used immediately.
B. merely replaces existing, but worn out, capital.
C. replaces existing workers.
D. is more efficient than existing capital.
Answer: B
You might also like to view...
The IS curve would unambiguously shift up and to the right if there were
A) an increase in both government purchases and corporate taxes. B) an increase in both government purchases and the expected future marginal product of capital. C) an increase in the expected future marginal product of capital and a decrease in expected future output. D) a decrease in both corporate taxes and the expected future marginal product of capital.
An economy of 25 million people has twenty percent of them engaged in research and development, where their productivity is 0.0056. The economy is on a balanced growth path, when suddenly a wave of immigration raises the population to 27 million
Assume that the new workers are immediately "on the job," and that the fraction engaged in R&D remains twenty percent. For the one period that begins with this population increase, the growth rate of output per person is ________. [Refer to the instruction above.] A) 4.3% B) 1.8% C) 3% D) 8%