1. In an economy with no government sector or foreign sector, saving must equal investment because a. total demand is equal to consumption and investment. b. total income is equal to consumption and...

1. In an economy with no government sector or foreign sector, saving must equal investment because

a. total demand is equal to consumption and investment.

b. total income is equal to consumption and saving.

c. total income is equal to total demand.

d. All of the above e. None of the above

2. If the capital stock remains fixed while labor decreases, the new labor is likely to be ____________ (more/less) productive than the old labor because of diminishing returns.

3. If the private sector saves 10 percent of its income and the government raises taxes by $200 to finance public investments, total investment—private and public investment—will increase by ____________.

4. An increase in the capital stock can decrease output without a corresponding labor force decrease. ____________ (True/False)