According to Romer and other new growth theorists, what could poor countries do to stimulate greater economic growth? What will be an ideal response? ANSWER According to new growth theory, poor countries can stimulate greater economic growth by investing more in human capital as well as physical capital, by moving toward freer trade, and […]
Which of the following statements is true about data? A) Empiricism does not necessarily involve data. B) Consistency of models can be checked using data. C) Convincing data analysis in economics relies on using a small sample. D) Facts that describe the world are not considered data. ANSWER B
If an individual borrows $100 at an annual rate of interest of 5%, how much interest will he have to pay at the end of a year? A) $20 B) $10 C) $50 D) $5 ANSWER D
The relationship between planned real consumption expenditures of households and their current level of real disposable income is A) the consumption function. B) saving. C) dissaving. D) investment. ANSWER A
Consider two economies: A and B that are completely similar, except their savings rate. The savings rate in economy A is greater than the savings rate in economy B. Which of the following statements is true? A) Capital accumulation will be faster in economy B in comparison to economy A. B) Capital accumulation will be […]
The Keynesian short-run aggregate supply (SRAS) curve A) shows that real Gross Domestic Product (GDP) will increase only if the price level increases. B) is horizontal. C) assumes a full-employment level of real Gross Domestic Product (GDP). D) does not reflect any changes in nominal Gross Domestic Product (GDP). ANSWER B
Explain how the “new growth theory” treats technology differently from the way economists used to treat technology. What will be an ideal response? ANSWER Technology used to be treated as an outside factor of growth that could not be explained itself. The new growth theory includes technology as another factor of production and argues […]
Refer to the table above. At what price does the market for notebooks clear? A) $3 B) $4 C) $2 D) $5 ANSWER B
The savings rate designates: A) the difference between household consumption and savings. B) the difference between government revenue and government expenditure. C) the rate of return households earn on their savings. D) the fraction of income that households save. ANSWER D
If an individual borrows $200 at an annual rate of interest of 10%, what is the total amount that he will have to repay after one year? A) $20 B) $220 C) $210 D) $200 ANSWER B
