Less-developed countries are poor for all of the following reasons except one. Which one?
A. The labor force is too small.
B. Labor productivity is low.
C. Investment funds tend to flow abroad
D. Investment in human capital is very low.
Answer: A
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Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher
The Q-theory of investment
A) suggests that a downturn in real GDP will lead to a sharp fall in investment, which leads to further reductions in GDP through the multiplier. B) emphasizes the role of real interest rates and taxes. C) emphasizes that current investment spending depends positively on the expected future growth of GDP. D) links investment spending to stock prices.
Goods that are very useful and highly desired are likely to be relatively expensive, no matter how scarce or abundant they are
Indicate whether the statement is true or false
If this pollution occurs, one way of reaching efficient production levels is by setting a Pigovian Tax. To achieve efficiency with this tax means that the tax must equal the
A) marginal social cost. B) marginal private cost. C) marginal private benefit. D) marginal external cost.