Real GDP per person in both Alpha and Omega is equal to $2,000. Over the next 100 years, real GDP per person grows at a 1.5 percent annual rate in Alpha and at a 2.5 percent annual rate in Omega. After 100 years, real GDP per person in Alpha is ________ smaller than real GDP per person in Omega.
A. $2,000
B. $8,864
C. $5,410
D. $14,763
Answer: D
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One of the predictions of the HO model is that
A) countries with different factor endowments but similar technologies and preferences will have a strong basis for trade with each other. B) countries will tend to specialize, but not completely, in their comparative advantage good. C) reciprocal demand leads to an equilibrium terms of trade by inducing changes in both demand and supply. D) All of the above.
If the state of Washington's government collects $75 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be a:
a. a decrease in the payroll tax b. budget surplus c. an increase in spending d. budget deficit
In the short run, an unanticipated increase in the money supply will exert its primary impact on
a. output and employment rather than on prices. b. prices; output and employment will be largely unaffected. c. interest rates; rising interest rates will stimulate additional saving. d. prices, if the economy operates at an output level below its long-run supply constraint.
The horizontal axis in the AD-AS model shows:
A. the economy's nominal GDP growth rate. B. the economy's short-term interest rate. C. the economy's real GDP growth rate. D. the economy's inflation rate.