Small differences in annual growth rates of real GDP generate large differences in real GDP over time because of the:
A. diminishing returns to capital.
B. importance of average labor productivity.
C. limits of economic growth.
D. power of compound interest.
Answer: D
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The Cambridge k is all of the following except
A) the reciprocal of the income velocity of money. B) a transactions demand for money. C) the fraction of GDP that people wish to hold in the form of money balances. D) the velocity of money.
Assume that in a price-fixing game, if Player A breaks the agreement in the first year, she earns $11 while Player B earns $5 . However, if Player A breaks the agreement once, Player B decides to break the agreement for eternity, leaving each to receive $8 per year for the rest of their lives. If they both keep the agreement each receives $9 per year for the rest of their life. If the discount
rate is 120 percent per period: a. Player A will prefer to break the agreement in the first year. b. Player A will prefer to break the agreement in the second year. c. Player A will prefer to keep the agreement throughout her life. d. Player A will prefer to keep the agreement only for the first five years.
If a large number of skilled workers retire at about the same time through early retirements or buyouts, what will happen to the wages of skilled workers, other things being equal?
Which of the following is NOT a characteristic of a corporation?
A) limited liability for shareholders B) double taxation C) separation of ownership problems D) limited ability to raise capital funds