The Next Questions Refer to the Following

question 21

Multiple Choice

The next questions refer to the following.
Suppose the economy has the production function Y = .8K, gross investment is 10% of national income, and the rate of depreciation is 5% of the capital stock.
-The capital stock of this economy

• A) is constant
• B) will grow by 2% per year
• C) will grow by 3% per year
• D) will grow by 5% per year
• E) will grow by 6% per year

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Definitions:

Utility

The total satisfaction or benefit that a consumer derives from consuming a product or service.

Probability

The measure of the likelihood that an event will occur, ranging from 0 (impossible) to 1 (certain).

Expected Income

An estimate of the amount of money an individual or entity anticipates earning over a specified period, often used for budgeting or planning purposes.

Tuition

The fee charged for instruction or teaching, typically by a school, college, or university.