Author Question: Explain how each of the following could discourage economic growth: a. The government closes all of ... (Read 49 times)

craiczarry

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Explain how each of the following could discourage economic growth:
 a. The government closes all of the schools so that more people will be available for work.
  b. The country fears military invasion and spends half of its income on military goods.

Question 2

Aggregate demand can be defined as:
 a. the total spending by all consumers, business firms, government agencies, and foreigners in the United States.
  b. the total amounts that all consumers, business firms, government agencies, and foreigners wish to spend on all final goods and services at various price levels.
  c. the total spending by consumers, business firms, and government agencies in one year.
 d. the total spending by consumers, business firms, and government agencies on final goods and services.



babybsemail

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Answer to Question 1

Economic growth depends on a country's willingness to sacrifice current consumption and invest in physical and/or human capital goods. Expanding the country's capital stock or improving the quality of its labor force allows it to produce more goods and services. Closing all of the schools will mean sacrificing investment in human capital in favor of current consumption. Likewise, choosing to spend half of available income on military goods will leave fewer resources for investment in nonmilitary physical or human capital.

Answer to Question 2

b



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