Profits will be maximized when the slope of the total revenue curve and the slope of the total cost curve equal zero

Imagine an economy that produces capital goods and consumption goods. What will happen to its production possibilities curve if some of its existing capital stock wears out and is not replaced? How will your answer differ if more than enough capital is produced to replace the capital that wears out?

Suppose the economy is operating at its full-employment-noninflationary GDP and the MPC is .75. The federal government now finds that it must increase spending on military goods by $21 billion in response to deterioration in the international political

situation. To sustain full- employment-noninflationary GDP, government must: A. reduce taxes by $28 billion. B. reduce transfer payments by $21 billion. C. increase taxes by $21 billion. D. increase taxes by $28 billion.