In order to increase their rate of economic growth, most poor countries need to:
A. establish political stability and the rule of law
B. obtain greater financial support from rich countries
C. extract more of the natural resources that lie within their borders
D. maintain the structural macroeconomic policies that they began to implement after World War II
Answer: A. establish political stability and the rule of law
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If the consumption function is C = 25 + 0.9y and income increases by $100, then savings will increase by
A) $10. B) $25. C) $90. D) $115.
If the long-run average cost curve is U-shaped, the optimal scale of production from society's viewpoint is
A) where maximum economic profit is earned by producers. B) the minimum efficient scale. C) one which guarantees economic profit. D) where firm profit is large enough to finance research and development.
Equilibrium GDP
a. is not affected by nominal wage adjustments b. represents the level of output at which public welfare is maximized c. in the long run is equal to the average of the short-run GDP equilibria d. is influenced by long-run adjustments in the labor market e. falls if aggregate demand increases
The rule of 70 is most useful in
What will be an ideal response?