An example of a government policy to enhance technological progress is:
A. maintaining a well-functioning legal system.
B. the provision of publicly-funded education.
C. the construction of an interstate highway system.
D. government support for basic research.
Answer: D
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
If an economy's population grows at 3 percent and real GDP grows at 2 percent, then:
a. per capita real GDP is declining. b. the economy's standard of living is increasing. c. per capita real GDP is negative. d. per capita real GDP is growing. e. the economy is experiencing unemployment.
An economy's resources:
a. are limited in quantity. b. are always efficiently utilized. c. consist of land, labor, capital, and money. d. are unrelated to its standard of living. e. are unlimited when we use the latest technology.
Jennifer lives in two periods. In the first period, her income is fixed at $72,000; in the second, she is gets a 4% raise in her income. She can borrow and save at the market interest rate of 5 percent.
(A) Sketch her intertemporal budget constraint. (B) Suppose that Jennifer is unable to lend at any rate of interest, although she can still borrow at 5 percent. Sketch her new intertemporal budget constraint.