If the Capital-Output Ratio Is Three,the Full-Employment GDP Is $5,100

question 56

Multiple Choice

If the capital-output ratio is three,the full-employment GDP is $5,100 billion,and intended investment is $750 billion,then a $60 billion increase in intended investment will increase full-employment GDP by ________ billion.

• A) $250
• B) $180
• C) $60
• D) $50
• E) $20

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Definitions:

Laissez-faire

An economic system in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, and tariffs.

Capitalist Economy

An economic system where private individuals and business owners control the production, distribution, and exchange of goods and services, typically driven by profit motives.

Central Planning

An economic system where all major production, investment, and allocation decisions are made by the government or a central authority.

Government Ownership

The situation in which assets, enterprises, or industries are owned and operated by the government rather than private individuals or companies.