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QUESTION 2 Which statement about US private domestic investment is INCORRECT? It includes the purchase of machinery by foreig

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2. The gross private investment is the investment made by the private sector on the purchase of machinery, plants, tools etc..... There are other three investments also.

Non -residential investment.

Residential investment.

Change in inventories.

The non residential investment includes the expenditure made by the firms on machinery , tools, plant capacity and etc.... The residential investment includes expenditure on houses by the firms and households.

Ans: It includes the production of new software.

3. The central bank of the nation has variety tools to influence the aggregate demand in the country. '

If the central bank lower the discount rate that would increase the money supply, the increase in the money supply further stimulate the aggregate demand. The purchase of the treasury securities also adds more money into the hands of public and this will increase the money supply.

Ans: Decreasing taxes.

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