Could the high-income Asian economies be characterized as open economies? Explain
What will be an ideal response?
There has been much debate on this subject. It is possible that high-growth Asian economies promoted their exports and severely restricted imports to protect domestic markets. In that case, their policies were not market-oriented, but instead reflected a high degree of government intervention. Alternatively, East Asian economies might not have set tough constraints on imports, but followed relatively open export promotion policies that contributed to rapid economic growth, more or less in line with market-based incentives. Examination of trade data supports the theory that East Asian economies did not close their import sectors, but rather imported quite a large amount of goods and services.
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The view that velocity is constant in the short run transforms the equation of exchange into the quantity theory of money. According to the quantity theory of money, when the money supply doubles
A) velocity falls by 50 percent. B) velocity doubles. C) nominal incomes falls by 50 percent. D) nominal income doubles.
If we assume perfect information, perfect mobility of resources, and no transactions costs, then there is little need for firms
a. True b. False
If the MPC is 0.6, and the government increases its spending by $300b, the overall effect on GDP will be:
A. a decrease of $750b. B. an increase of $750b. C. a decrease of $550b. D. an increase of $250b.
Which resource is not an example of capital?
a. Stocks or bonds b. Machinery c. Equipment d. Physical plants