An open economy with a low saving rate (private and public) must have
A) low investment only.
B) high investment only.
C) a trade surplus only.
D) low investment or a trade deficit.
E) low investment or a trade surplus.
D
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The amount of gross investment in the economy depends on the
A) response of expected output to the error in estimating the past period's actual output. B) amount of the difference between the desired capital stock and last period's capital stock that can be put in place this period. C) fraction of the capital stock that is replaced each period. D) All of the above are correct.
Refer to the graph. Other things equal, an increase in the price of substitute resource would cause a:
A. shift from D 2 to D 3 assuming the substitution effect exceeds the output effect.
B. move from a to b on D 1 .
C. move from b to a on D 1 .
D. shift from D 3 to D 2 assuming the substitution effect exceeds the output effect.