How does a higher level of saving lead to higher GDP in the future?
(A) Because increased savings will divert money that would be spent on imported goods in the current year.
(B) Because more capital is available for investment, leading to higher output through capital deepening.
(C) Because a higher national savings rate encourages immigration and expands the labor force.
(D) Because the government taxes savings accounts to pay for education.
Ans: (B) Because more capital is available for investment, leading to higher output through capital deepening.
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If consumption spending increases because people feel more confident about the future,
A) aggregate demand will shift to the left. B) aggregate demand will shift to the right. C) aggregate supply will shift to the left. D) aggregate supply will shift to the right.
A perfectly competitive firm is producing zero units of output in the short run. We know that price is
A) below the minimum point of its average fixed cost curve. B) below the minimum point of its average variable cost curve. C) below the minimum point of its average total cost curve. D) between the minimum points of its average total cost curve.