Suppose a Developing Country Experiences a Reduction in Machinery and Capital

question 46

Multiple Choice

Suppose a developing country experiences a reduction in machinery and capital equipment as foreign entrepreneurs decrease the amount of investment in the economy.As a result

• A)the long-run aggregate supply curve will shift to the right.
• B)the long-run aggregate supply curve will shift to the left.
• C)the economy will move up along the long-run aggregate supply curve.
• D)the economy will move down along the long-run aggregate supply curve.

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Definitions:

Discount Rate

The specified interest rate for determining the present value of future cash flows in the context of discounted cash flow studies.

Payback Period

The time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.

Useful Life

The expected period of time during which an asset remains useful for the purposes for which it was acquired.

Payback Period

The amount of time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment itself.