If the working-age population in an economy shrinks, real GDP can still grow if:
A. Work hours per week decreases, to spread work among more workers
B. Labor productivity increases rapidly enough
C. Consumption by households increase rapidly
D. Spending by firms and the government increases
B. Labor productivity increases rapidly enough
You might also like to view...
Banks help savers find productive uses for their funds because banks are specialized in:
A. evaluating the riskiness of stocks. B. securing government guarantees for loans. C. obtaining preferential tax treatment for savers. D. gathering information about and evaluating potential borrowers.
In 2008, the Treasury and Federal Reserve took action to save large financial firms such as Bear Stearns and AIG from failing. Which of the following is one reason why these measures were taken?
A) The Fed and the Treasury wanted to allow Freddie Mac and Fannie Mae more time to buy the firms before they went bankrupt. B) The Emergency Economic Stabilization Act required the Fed and the Treasury to provide financial assistance to firms that participated in regular open market actions with the Fed. C) The bankruptcy of a large financial firm would force the firm to sell its holdings of securities, which could cause other firms that hold these securities to also fail. D) The failure of these firms would have forced the Fed to increase interest rates, which could have led to a severe recession.
Morgan lives in San Francisco and likes to dine out. Morgan has noticed that prices at restaurants near popular tourist destinations in the city tend to be higher than at restaurants of the same quality in other neighborhoods. One reason for this is that:
A. tourists don't worry about money while on vacation. B. search costs are higher for people who are unfamiliar with the area. C. residents don't like to eat in restaurants frequented by tourists. D. restaurant meals are a small fraction of the total cost of a vacation.
There are ten states in the democratic nation of Katlandia, and each state has ten thousand residents. Although incomes vary, each Katlandian pays a tax equal to the total cost of all government projects divided by the number of residents in the country. Currently, two states each have one army base. An army base adds $2 million to a state's local economy each year. In addition, in terms of increased security, the annual marginal benefit to Katlandia of having an additional army base is shown below. The total cost of an army base is $8 million per year.
Suppose the department of defense proposes to build a third base in the state of New Porkswick. The
state representative from New Porkswick will ________ this proposal because ________. A. support; it is socially optimal for Katlandia to have a third army base. B. not support; the benefits to his or her constituents would be smaller than the resulting increase in taxes. C. not support; it is not socially optimal for Katlandia to have a third army base. D. support; the benefits to his or her constituents would outweigh the resulting increase in taxes.