Which one of the following is TRUE?
A. Saving enables economic growth by providing for investment in the capital stock.
B. International comparisons have found no relationship between the rate of saving and the level of per capita real GDP.
C. Saving deters economic growth, because it takes money out of circulation.
D. Economies with sophisticated credit markets, such as the United States, have no need for saving.
Answer: A
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With allocative efficiency:
A. the available supplies of factors of production are fixed in both quantity and quality. B. production of any particular mix of goods and services is that mix most wanted by society. C. production of any particular mix of goods and services occurs in the least costly way. D. the state of technology-or methods used to produce output-does not change.
Which represents an expenditure that would be counted directly in GDP?
A. The distribution of corporate profits to stockholders. B. The buying of corporate stock by an investor. C. The buying of a used car by a consumer. D. The payment of military salaries by the government.
If the real exchange rate is greater than 1, then the
a. nominal exchange rate x U.S. price > foreign price. The dollars required to purchase a good in the U.S. would buy more then enough foreign currency to buy the same good overseas. b. nominal exchange rate x U.S. price > foreign price. The dollars required to purchase a good in the U.S. would not buy enough foreign currency to buy the same good overseas. c. nominal exchange rate x U.S. price < foreign price. The dollars required to purchase a good in the U.S. would buy more then enough foreign currency to buy the same good overseas. d. nominal exchange rate x U.S. price < foreign price. The dollars required to purchase a good in the U.S. would not buy enough foreign currency to buy the same good overseas.
There has been much discussion over whether marijuana should be legalized. Assume that if it becomes legal the price will be cut in half. Given your text estimate of -1.0 price elasticity for marijuana, what would you expect to be the change in marijuana usage?
A. It will double. B. It will not change. C. It will be cut in half. D. It will increase by 50%.