Question 6(1 point)

Which of the following statements is true?

a

Development ofnew technologiesincrease future expected returns, and thus encourage firms to invest more in new technologies, which increases AD.

b

Ifexcess capacityincreases, firms will decrease investment, which decreases AD.

c

If excess capacity decreases, firms will increase investment in order to expand operations, which increases AD.

d

All of the above.

e

Only a) and b)

Question 7(1 point)

Which of the following statements is true?

a

A decrease in businesstaxesdecreases the amount of after-tax income for firms, and thus decreases investment, which reduces AD.

b

An increase in business taxes increases AD.

c

Other things equal, if government spending increases, AD increases, and if government spending decreases, AD decreases.

d

All of the above.

e

Only a) and b)

Question 8(1 point)

Which of the following statements is true?

a

An example of an increase in G is an increase in transportation system projects.

b

An example of a decrease in G is a reduction in military spending.

c

If net exports decrease, AD rises, and if net exports increase, AD falls.

d

All of the above.

e

Only a) and b)