In what way are other assets less liquid than money?
What will be an ideal response?
You incur transactions costs when you exchange other assets for money.
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Country A and country B both increase their capital stock by one unit. Output in country A increases by 10 while output in country B increases by 8 . Other things the same, diminishing returns implies that country A is
a. richer than Country B. If Country A adds another unit of capital, output will increase by more than 10 units. b. richer than Country B. If Country A adds another unit of capital, output will increase by less than 10 units. c. poorer than Country B. If Country A adds another unit of capital, output will increase by more than 10 units. d. poorer than Country B. If Country A adds another unit of capital, output will increase by less than 10 units.
Which of the following about inventory changes and GDP is true?
What will be an ideal response?