In a Small Asian Country,it Is Estimated That Changing the Level

question 10

Multiple Choice

In a small Asian country,it is estimated that changing the level of capital from $8 million to $12 million will increase real GDP from $4 million to $6 million.What level of GDP would you expect the economy to be able to reach if spending on capital continued to rise to $16 million,assuming no technological change and no change in the hours of work?

• A)GDP would increase further,but by less than $2 million.
• B)GDP would increase further by exactly $2 million.
• C)GDP would increase further by more than $2 million
• D)GDP would increase further by exactly $8 million.

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Definitions:

Nominal Amount

The face value of a bond or other financial instrument, as distinct from its market value or purchase price.

Underwrites

The process of assessing and assuming the risk of another party, often used in the context of insurance policies or issuing of securities.

Investment Firm

A company or financial institution that makes investments in securities, real estate, and other investment vehicles on behalf of its clients.

Stock Issue

The process of making new shares available for sale to investors by a company, either through an initial public offering (IPO) or a secondary offering.