When a Country Adds More Capital to Its Existing Stock

question 108

Multiple Choice

When a country adds more capital to its existing stock:

• A) the additional productivity is less than the previous increases to productivity.
• B) the additional productivity is more than the previous increases to productivity.
• C) it experiences rapidly increasing rates of growth.
• D) it experiences rapid declines in its level of income.

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Definitions:

Discount Rate

The rate at which the central bank lends money to commercial banks and other financial institutions through its discount window.

Fiscal Expenditure

Government spending, including spending on goods and services, welfare, and public works, financed through taxation or borrowing.

Taxes

Taxes are compulsory financial charges or levies imposed by a government on individuals or entities to finance government spending and various public expenditures.

Aggregate Demand-Aggregate Supply Model

A macroeconomic model that explains price level and output through the relationship between aggregate demand and aggregate supply.