What are the key assumptions of the Lewis model that give rise to its conclusions? How would the theory's conclusions differ if these assumptions do not hold?
What will be an ideal response?
There may be a variety of answers depending on what was emphasized in the lecture. The answer should include the existence of surplus labor in the rural sector that guarantees an infinitely elastic labor supply in industry until the surplus is exhausted and a propensity to save by industrialists equal to one. The lack of rural surplus labor (and infinite labor supply) would imply that when industrialists reinvest their profits there is no guarantee that their surplus increases. A low marginal propensity to save by industrialists puts a break on the labor transfer process.
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Which of the following is a positive economic statement?
a. Government control of rent is a fair way to help poor people afford housing. b. Government control of rent keeps landlords from charging too much rent. c. Government control of rent decreases the number of new apartments constructed. d. Government control of rent is an injustice.
The U.S. goal for price stability:
A. Is an inflation rate of 3 to 6 percent. B. Is an inflation rate of zero or less. C. Changes each year based on economic performance. D. Is an inflation rate of fewer than 3 percent.
For this question assume that technological progress does not occur. The rate of saving in Canada has generally been greater than the saving rate in the U.S. Given this information, we know that in the long run
A) Canada's growth rate will be greater than the U.S. growth rate. B) investment per worker in Canada will be no different than U.S. investment per worker. C) capital per worker in Canada will be no different than U.S. capital per worker. D) all of the above E) none of the above
Which economist introduced the simple trade model and the concept of trade based on comparative advantage?
What will be an ideal response?