Answer the following statements true (T) or false (F)
1) Saving is low in many DVCs primarily because income is very equally distributed.
2) The differences in the per capita incomes of the IACs and the DVCs have diminished sharply
since the Second World War because of U.S. aid programs.
3) If the real outputs per capita of a rich nation and a poor nation grow at the same percentage
rate, the absolute income gap between the two nations will shrink.
4) Capital flight refers to the fact that many DVCs must use their export earnings to pay interest on their outstanding external debts.
1) F
2) F
3) F
4) F
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If benefit functions for a public good could be identified accurately, incremental benefits would be measured as
a. the area under the MSB function between the pre- and post-policy abatement levels. b. the area under the TSB function between the pre- and post-policy abatement levels. c. a horizontal distance on the MSB model corresponding to the pre- and post-policy abatement levels d. none of the above
The rapid growth of China's economy relative to the United States has benefitted U.S. consumers because
A) U.S. consumers can purchase more lower-priced goods made in China. B) competition from China has made jobs harder to find in the United States. C) goods made in China are always of higher quality than goods made in the United States. D) the United States has comparative advantage in more goods than China does.
To maximize social welfare in the presence of a negative externality, marginal ____ must equal marginal ____
a. social cost; private cost b. private cost; social cost c. social cost; social benefit d. private cost; social benefit
The purchase of French wine by U.S. consumers will be accounted as:
a. a deficit in the services account. b. a credit in the merchandise account. c. a debit in the services account. d. a surplus in the services account. e. a debit in the merchandise account.