The addition to the economy's capital stock can be found by
A. Subtracting net income from gross investment.
B. Subtracting NDP from GDP.
C. Subtracting depreciation from GDP.
D. Subtracting depreciation from gross investment.
Answer: D
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Which of the following changes is observed when the Fed increases the federal funds rate? a. Inflation is brought to an immediate halt
b. The inflation rate increases for several months, but then begins to decrease. c. Major banks try to offset this change by lowering the interest rates they charge on loans. d. Major banks try to offset this change by lowering the interest rates they pay on savings deposits. e. Major banks raise the prime interest rate that they charge to their best customers.
Keynesian economists argue that monetary policy works through its effects on:
a. interest rates and investment. b. price- and wage-flexibility. c. budget deficits and trade deficits. d. the spending and money multipliers.