Refer to Figure 18-8 to answer the following questions
a. Did the distribution of income become more equal in 2016 than it was in 2015, or did it become less equal? Explain.
b. If area A = 1,900, area B = 450, and area C = 2,650, calculate the Gini coefficient for 2015 and the Gini coefficient for 2016.
a. The distribution of income became less equal in 2016. The Lorenz Curve for 2016 is farther from the diagonal line of equality than is the Lorenz Curve for 2015.
b. The Gini Coefficient = (the area inside the Lorenz Curve)/(the area beneath the diagonal line of equality). Thus, for 2015, the Gini Coefficient = (A)/(A + B + C) = 1,900 /5,000 = 0.38. For 2016, the Gini Coefficient = (A + B)/(A + B + C) = 2,350 /5,000 = 0.47.
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The capital-output ratio is measured by dividing
a. the capital stock by labor b. output by the capital stock c. the capital stock by GDP d. the change in labor by GDP e. GDP by labor
Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and current international transactions in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls and current international transactions become more positive (or less negative). b. The real risk-free interest rate rises and current international transactions become more negative (or less positive). c. The real risk-free interest rate and current international transactions remain the same. d. The real risk-free interest rate rises and current international transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
The purpose of antitrust policy is to encourage competition in an industry.
Answer the following statement true (T) or false (F)
If product demand increases and product price increases
A. the marginal revenue product curve will shift to the right. B. the firm will move down the marginal revenue product curve and hire more units of the input. C. the marginal revenue product curve will shift to the left. D. the firm will move up the marginal revenue product curve and hire fewer units of the input.