Gross investment
A) is the purchase of new capital.
B) includes only replacement investment.
C) does not include additions to inventories.
D) Both answers A and B are correct.
A
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A college graduate in 1972 found a job paying $7,200. The CPI was 0.418 in 1972. A college graduate in 2005 found a job paying $30,000. The CPI was 1.68 in 2005. The 1972 graduate's job paid ________ in nominal terms and ________ in real terms than the 2005 graduate's job.
A. more; more B. more; less C. less; more D. less, less
If the price of labor goes up and a firm replaces some workers with more machines, this is the _______ effect; when the price of a resource declines, and consequently the level of production rises, this is the _______ effect.
Fill in the blank(s) with the appropriate word(s).