Consider the two graphs above. Suppose that technological progress is expected to reduce the future cost of capital goods. This would ________ the desired level of the capital stock, as depicted in graph ________

Creative destruction is:

A. the process by which large firms buy up small firms. B. the process by which new firms and new products replace existing dominant firms and products. C. a term coined many years ago by Adam Smith. D. applicable to planned economies but not to market economies.

Inflation is an overall:

A. rise in prices in the economy. B. decline in prices in the economy. C. decline in prices in the economy, excluding those with historically volatile price changes. D. rise in prices in the economy, excluding those with historically volatile price changes.