Explain how fiscal policy can correct a contractionary ga What will be an ideal response? ANSWER A contractionary gap can be closed by an increase in aggregate demand. By increasing government spending or reducing taxes, aggregate demand increases, thereby raising the level of real GDP.
Date: September 2nd, 2020
Explain how the following will affect the supply curve of coffee. a) A fall in the wages paid to coffee workers b) An increase in the availability of high-yielding coffee plants c) A decrease in the quantity of land under coffee cultivation What will be an ideal response? ANSWER a) A fall in wages […]
Date: September 2nd, 2020
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. […]
Date: September 2nd, 2020
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
Date: September 2nd, 2020
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 […]
Date: September 2nd, 2020
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
Date: September 2nd, 2020
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. […]
Date: September 2nd, 2020
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
Date: September 2nd, 2020
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.
Date: September 2nd, 2020
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 […]
Date: September 2nd, 2020
