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

Economics

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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.

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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?

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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

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