Practice Questions
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Which of the following best describes the relationship between investment and long-run supply in an economy?
When businesses invest more, they can use their resources better. Other options are incorrect because Some might think that investment doesn't change ...
How does the marginal productivity of capital influence economies of scale in a long-run supply scenario?
When capital is more productive, it means that each dollar spent helps produce more goods. Other options are incorrect because Some might think that h...
How does investment in capital goods affect resource allocation in the long run?
When businesses invest in capital goods, like machines or tools, they can produce more products. Other options are incorrect because Some might think ...
In the context of long-run supply, how does effective resource allocation influence production factors and the diversification of investments within an economy?
When resources are used well, businesses can produce more with the same amount of workers and machines. Other options are incorrect because Some might...
When evaluating an investment's potential in the context of long-run supply, which of the following factors is essential in understanding future benefits and resource allocation while managing risk assessment?
To understand investments well, you need to look at everything together. Other options are incorrect because Some might think only past performance ma...
How does an increase in investment in capital goods typically affect long-run supply in an economy?
When businesses invest in capital goods, like machines or buildings, they can produce more products. Other options are incorrect because Some might th...
What is the primary reason that businesses invest in long-term projects?
Businesses invest in long-term projects to gain more benefits in the future. Other options are incorrect because Some might think that investing in lo...
Which of the following best describes the relationship between investment and long-run supply in an economy?
When businesses invest more, they can buy better tools and hire more workers. Other options are incorrect because Some might think that investment doe...
Which of the following statements accurately describe the impact of investment spending on long-run aggregate supply (LRAS)? Select all that apply.
Other options are incorrect because This suggests that investment directly shifts LRAS; This option implies that investment causes inflation without a...
A manufacturing company decides to invest heavily in automation technology, which significantly increases its production capacity. How is this investment likely to affect the long-run aggregate supply (LRAS) in the economy?
Investing in automation means the company can produce more goods. Other options are incorrect because Some might think that using machines means fewer...
How does increased investment spending typically affect long-run aggregate supply (LRAS)?
When businesses invest more, they buy new machines and tools. Other options are incorrect because This option suggests that investment reduces the cap...
If businesses increase their investment in new technology and equipment, what is the most likely effect on long-run aggregate supply (LRAS)?
When businesses invest in new technology, they can produce more goods efficiently. Other options are incorrect because Some might think that more inve...
Investment spending is to long-run aggregate supply as ____ is to ____.
Investment spending helps businesses grow and produce more over time. Other options are incorrect because This answer confuses short-term effects with...
How does increased investment in technology affect long-run aggregate supply?
When we invest more in technology, it helps workers be more productive. Other options are incorrect because Some might think that only the number of w...
Order the following steps to illustrate how investment spending affects long-run aggregate supply (LRAS): A) Increased capital stock leads to enhanced productivity, B) Businesses invest in new equipment and technology, C) The LRAS curve shifts to the right, D) Investment spending plays a critical role in capital formation.
Investment spending is the first step. Other options are incorrect because This option suggests that increased capital stock happens before businesses...
A company decides to invest in new technology that increases production efficiency. How would this decision most likely affect the long-run aggregate supply (LRAS)?
When a company uses better technology, it can make more products with the same resources. Other options are incorrect because Some might think that ne...
Investment spending primarily affects long-run aggregate supply by facilitating __________, which enhances productivity.
Investment spending helps build new tools, machines, and buildings. Other options are incorrect because Some might think that spending by consumers is...
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