If a nation’s productivity grows by 3% rather than 1.5% over many years, what will be the difference in the nation’s standard of living? Explain.
What will be an ideal response?
The answer is based on the rule of 70. A 3% increase in labor productivity means that the standard of living in an economy will double in about 23 years (70/3). An increase in labor productivity that is 1% less, or 1.5%, means that it will take 47 years (70/1.5) for the standard of living to double.
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Because many emerging market countries have not developed the political or monetary institutions that allow the successful use of discretionary monetary policy
A) they have little to gain from pegging their exchange rate to an anchor country like the U.S. or Germany. B) they have little to gain from using a nominal anchor, because it would mean a monetary policy that is overly expansionary. C) they have very little to gain from an independent monetary policy, but a lot to lose. D) they would be better off giving their central bankers the independence to use discretion, rather than take their discretion away through any nominal anchor.
Describe how health care insurance affects the market for health care in a simple supply and demand model
What will be an ideal response?
If ZipCo's marginal revenue product curves slope downward, what can we conclude about the structure of the market in which ZipCo sells its product?
a. The firm is a price searcher because price is greater than marginal revenue. b. The firm is a price taker because price is equal to marginal revenue. c. The firm is a price searcher because the price of each resource is constant. d. The firm is a price taker because the price of each resource is constant. e. Nothing.
You decide to lend $100 to a friend interest free for one year. You calculate that you could have earned 10% interest. What is the opportunity cost of the loan if it is paid on time?
A. $100 B. $10 C. $0 D. $110