Which of the following is a true statement regarding the economic growth model's predictions and how it actually affects the real world?
A) The growth model predicts that poor countries will catch up with rich countries, but lower-income industrialized countries are not catching up to higher-income industrialized countries as a group.
B) The growth model predicts that poor countries should catch up with rich countries, but developing countries are not catching up to lower-income industrialized countries as a group.
C) The growth model predicts that poor countries will catch up with rich countries, and this is what we observe across all developmental categories of countries.
D) The growth model predicts that poor countries will never catch up with rich countries, but lower-income industrialized countries are catching up to higher-income industrialized countries as a group.
B
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If the government increases spending while holding taxes constant, we expect
A) a decrease in real saving as consumers follow suit and also increase borrowing. B) planned real investment spending by businesses to increase. C) an increase in investment spending by businesses too, as they anticipate future economic growth. D) interest rates to rise.
Refer to the scenario above. Which of the following will happen in this case?
A) Neither of them will make any money. B) Only Elly will make money. C) Elly will trust, but her employee will defect. D) Elly will trust, and her employee will cooperate.
Everything else held constant, an appreciation of the domestic currency will cause the IS curve to shift to the ________ and aggregate demand will ________
A) right; increase B) right; decrease C) left; increase D) left; decrease
Purchasing power parity holds when the exchange rate is equal to the product of the foreign price level and the domestic price level
a. True b. False Indicate whether the statement is true or false