Less of an Economy's Resources Will Be Channeled into Building

question 57

Multiple Choice

Less of an economy's resources will be channeled into building new factories and equipment when:

• A)interest rates are high.
• B)households decide to save more of their income.
• C)firms are optimistic about their future profits.
• D)aggregate income increases.
• E)an economy has a trade deficit.

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Definitions:

Ordinary Maintenance

Refers to routine upkeep and repairs necessary to maintain assets in their current condition without improving or extending their life.

Long-Lived Assets

Tangible or intangible resources owned by a company with a useful life extending beyond one year, such as buildings, equipment, and patents.

Sales Taxes

Taxes imposed by governments on sales of goods and services, collected by the seller.

Asset Improvements

Expenditures made to enhance the efficiency, capacity, or lifespan of an asset, leading to an increase in its value.