Question

1.Which of the following would not be included in an economist's definition of investment spending?

	a	the purchase of robots by Motor Magic Manufacturing
	b	the construction of a new office building by the Mountain City Real Estate Company
	c	the purchase of General Motors stock by Donald Trump
	d	the purchase of a new pizza oven by H and R Pizza
	e	an unexpected rise in inventories at Randle Manufacturing

2. A decrease in the demand for peanut butter could be caused by a(n)

	a	increase in the supply of peanut butter
	b	increase in the price of peanut butter
	c	doubling of the price of bread
	d	drought in Georgia that destroyed 30 percent of the peanut crop
	e	increase in consumer income

3. Which of the following would indicate the beginnings of an expansion of the economy?

	a	fewer new firms are started
	b	stock market prices decline
	c	consumer confidence improves
	d	housing construction slows
	e	orders for new equipment decrease

4. To determine the CPI, you would need to know the

	a	current market basket at current- and base-year prices
	b	base-year market basket at current- and base-year prices
	c	current market basket at current prices and base-year market basket at base-year prices
	d	current market basket at base-year prices only
	e	current market basket at current prices only

Answer 1

Do rate the answer

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1.Which of the following would not be included in an economist's definition of investment spending?

Answer: c)

As the purchase of stock only represent the transfer of ownership from one individual to another.

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2. A decrease in the demand for peanut butter could be caused by a(n)

Answer: b)

Law of demand states that other things remaining constant, a rise in price of a good leads to fall in its demand.

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3. Which of the following would indicate the beginnings of an expansion of the economy?

Answer: c)

When consumer confidence is high, consumers make more purchases. Consumer confidence typically increases when the economy expands, and decreases when the economy contracts.

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4. To determine the CPI, you would need to know the

Answer: a

The index is then calculated by dividing the price of the basket of goods and services in a given year by the price of the same basket in the base year. This ratio is then multiplied by 100, which results in the Consumer Price Index.