The "Investment" Component of Aggregate Demand Will Include All of the Following

question 180

Multiple Choice

The "investment" component of aggregate demand will include all of the following except

• A)expenditures of business firms on new plants.
• B)expenditures of business firms on new equipment.
• C)resales of existing physical assets.
• D)household spending on new homes.

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Definitions:

Marginal Cost

The change in total production cost that comes from making or producing one additional unit of a good or service.

Fixed Cost

Costs that do not change with the level of output produced, such as rent and salaries.

Profits

The financial gain obtained when the revenue from business activities exceeds expenses, costs, and taxes.

Collusion

An agreement, usually secretive, between two or more parties to limit competition and manipulate prices for their benefit.