How does the concept of catch-up growth explain the diminishing income gap between the developing economies and developed economies? What will be an ideal response? ANSWER Catch-up growth refers to the process whereby relatively poorer nations increase their incomes by taking advantage of knowledge and technologies already invented in other, technologically more advanced countries. […]
According to the above table, the value of the MPC is A) 0.1. B) 0.7. C) 0.5. D) 0.9. ANSWER D
The equilibrium quantity in a perfectly competitive market is determined: A) at the point of intersection of the demand curve and the quantity axis. B) at the point of intersection of the demand and supply curves. C) at the point of intersection of the supply curve and the quantity axis. D) at the point of […]
A patent is A) an agreement between a union and management on certain labor issues. B) a bond issued by the government. C) the monopoly right given to a producer/company. D) a bond issued by a state. ANSWER C
Total planned real expenditures measured along the aggregate demand curve are made up of A) consumption spending, factor payments, investment spending, and net export spending. B) consumption spending, income, government spending, and net export spending. C) consumption spending, saving, investment spending, and government spending. D) consumption spending, investment spending, government spending, and net export spending. […]
Money serves as a standard of value, which is another way of saying that money functions as A) a unit of accounting. B) a medium of exchange. C) an opportunity cost of investment. D) standard of deferred payment. ANSWER A
What is discretionary fiscal policy and what is its purpose? What will be an ideal response? ANSWER Discretionary fiscal policy is the deliberate changing of government spending and/or taxes. Its purpose is to move the economy toward full employment with price stability more rapidly than it would if left on its own.
Consider two economies: Barylia and Lithasia. The GDP per capita in Lithasia is $6,000 while the GDP per capita in Barylia is $12,000. Both countries grow exponentially at an annual rate of 10%. How will their GDPs vary over the next year? Is there any limitation of comparing the absolute levels of GDP per capita […]
Which of the following statements is true of data? A) Anecdotes work as good substitutes for data. B) Data help in verifying causal relationships. C) Data are not important to evaluate theories. D) The less the available data, the better the analysis. ANSWER B
Cigarettes served as money in some prisoner of war (POW) camps during World War II. Given this, we would expect to observe A) no one ever smoking a cigarette. B) prices of other goods expressed in terms of cigarettes. C) only government-issued cigarettes being accepted as money. D) people usually resorting to barter rather than […]
