Which of the following provides the best explanation of why low-income countries generally remain poor?
a. Their institutional arrangements and policies often discourage productive activity and reduce the potential gains from specialization and exchange.
b. They are oppressed by developed nations that benefit from the cheap goods available from countries with low wage rates.
c. They are poorly endowed with natural resources, which are essential for long-term rapid growth.
d. When the average income level is low, workers have little incentive to earn higher incomes.
A
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The Ricardian two-country two-good model predicts that there are potential benefits from trade, but NOT
A) the effect of trade on income distribution. B) the mechanism that determines which country will specialize in which good. C) when one country has an absolute advantage in the production of both goods. D) when one country has significantly lower wages than the other country. E) when both countries have the same types of technology available.
Between 1994 and 2000 the poverty rate ____ and the number of people on welfare _____.
Fill in the blank(s) with the appropriate word(s).
Local property taxes are a
A. Progressive tax because the total tax on housing increases as the price of the house increases. B. Progressive tax because as income increases people tend to buy more expensive houses. C. Regressive tax because poorer people spend a larger portion of their income on property taxes. D. Proportional tax because properties are taxed at the same rate regardless of the value of the home.
The figure below shows a shift in the production-possibility curve of a country from AB to AC. Here, S1 and C1 are the initial production and consumption points, respectively. S2 and C2 are the final production and consumption points, respectively. Which of the following is illustrated by this figure?
A. A small country experiencing a balanced growth B. A large country experiencing growth biased toward wheat production C. A large country experiencing a balanced growth D. A small country experiencing growth biased toward cloth production