The basic principle that explains the demand for a factor of production is the
a. principle of marginal productivity.
b. Hotelling principle.
c. principle of opportunity cost.
d. Ramsey pricing principle.
a
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In the decade of the ________, A.W. Phillips plotted data for Great Britain which revealed a relationship between rates of changes in wages versus unemployment rates
Economists later discovered other "Phillips Curve" relationships between rates of inflation versus unemployment rates. A) 1930s B) 1940s C) 1950s D) 1960s
An advantage to a developing nation of fixed exchange rates is that it's:
A) easier for the central bank to print money to finance its deficit. B) harder for the central bank to print money to finance its deficit. C) easier to conduct fiscal policy. D) harder for the government to raise taxes.
The multiplier effect occurs because
A. When national income rises, the MPC increases, prompting further increases in income. B. The new income generated by an increase in aggregate demand will be spent, each time becoming new income again. C. The level of national income must be multiplied by the average propensity to consume to find total consumption spending. D. What business firms view as spending is viewed by households as income, so that new investment automatically becomes new income.
Suppose the president of country A opens this economy to trade with the rest of the world in 2010. Furthermore, suppose that the investment demand is the same as in 2009. Now, instead of being provided the equilibrium level of SP, we are provided with the SP curve: r =0.025+0.000025Q, where r is still the real interest rate. We are also told that the capital inflow equals $200 billion in 2010. For this part of the problem assumed that the government has a balanced budget in the year 2010. Is this country borrowing from or lending to foreign countries?
What will be an ideal response?