Suppose That the Value of the Capital Stock in the Economy

question 121

Multiple Choice

Suppose that the value of the capital stock in the economy is $150 million.If investment is equal to zero,then

• A) output will remain at its current level.
• B) the capital stock will decline in value but output will remain the same.
• C) the capital stock will decline in value and output will move down along the production function to a new lower level of output.
• D) the capital stock will decline in value and the production function will shift down as output falls.
• E) firms will hire more labor to compensate for the lack of investment and output will remain the same.

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Definitions:

Sole Proprietorship

A business structure where a single individual owns and operates the business, being solely responsible for its debts and obligations.

Federal Government

The national government of a federation, which holds the authority over matters that affect the entire country, such as defense, foreign policy, and monetary policy.

Personally Liable

Responsibility on an individual level for debts or legal obligations, rather than through an intermediary like a corporation or LLC.

Partnership

An authorized business setup where multiple individuals participate in management and equally divide profits.