Which One of the Following Would Count as Investment in the National

question 25

Multiple Choice

Which one of the following would count as investment in the national income accounts?

• A) purchase of a new airplane by an airline
• B) purchase of a U.S. government bond
• C) purchase of 100 shares of Wal-Mart stock
• D) purchase of an existing house

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Definitions:

Protective Tariffs

Import taxes imposed by a country on foreign goods to protect domestic industries from competition by making imported goods more expensive.

Comparative Advantage

The capacity of an entity to generate a product or service with a lesser opportunity cost compared to others.

Protectionist Argument

The rationale for implementing trade barriers, such as tariffs and quotas, to protect domestic industries from foreign competition.

Dumping

Selling goods in a foreign market at a price below the cost of production or below the price in the home market, often to gain market share.