Answer the following questions true (T) or false (F)
1. Countries without well-developed financial systems are able to sustain high levels of economic growth.
2. In an open economy, the country interacts with other economies through both trading of goods and services and borrowing and lending.
3. If there is public dissaving, investment spending in the economy will decline, holding everything else constant.
1. FALSE
2. TRUE
3. TRUE
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An increase in net exports will have a greater effect on equilibrium real GDP if the
A. marginal propensity to consume is smaller. B. average propensity to consume is larger. C. marginal propensity to save is larger. D. marginal propensity to save is smaller.
If an economy's production possibility frontier is negatively sloped and "bowed outward" from the origin, then the opportunity cost of producing a good
A. remains constant as less of that good is produced. B. remains constant as more of that good is produced. C. decreases as more of that good is produced. D. increases as more of that good is produced.
If an amusement park that is highly profitable during the summer months is unable to cover its variable costs during the winter months, it should
a. raise its prices during the winter months. b. lower its prices during the summer months. c. operate during the summer but shut down during the winter months. d. operate during all months of the year as long as its profits during the summer exceed its losses during the winter.
In European countries where it is hard to fire an employee:
A. employers are reluctant to hire workers. B. employers instead rely on undocumented transient workers. C. employers try hard to train workers well. D. employers often treat workers very poorly.