Contrast the economic experience of the HPAE with the experience in Latin America, especially with regard to the 1980s and in terms of weathering financial crises
What will be an ideal response?
The HPAE have grown more steadily and consistently and with a broader effect on all income levels in society. The HPAE successfully emphasized land reform, free public education, free basic health care, and significant investments in rural infrastructure, such as clean water, transportation, and communication systems, that helped bring a broader sector of society along in terms of development. The difference in growth is especially notable in the 1980s, when growth in the HPAE continued and even accelerated while Latin America was experiencing the "Lost Decade." In terms of handling financial crises, the time periods were different, but the HPAE tended to keep budget deficits and foreign debts at generally manageable levels. Governments were committed to low inflation, which helped avoid severe real appreciations in the exchange rate. In the HPAE, differences between the real exchange rate, the real interest rate, and the inflation rate were relatively low, fostering greater security in the minds of investors.
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Which of the following statements best describes the relationship between price and quantity demanded for a given good or service?
a. A rise in price of a good or service almost always decreases the quantity demanded of that good or service. b. A rise in price of a good or service always decreases the quantity demanded of that good or service. c. A rise in price of a good or service almost always increases the quantity demanded of that good or service. d. A rise in price of a good or service always increases the quantity demanded of that good or service.
Under a pure system of laissez faire, the government would not do which of the following?
a. prosecute criminals b. provide national defense c. punish those involved in conspiracies to fix prices d. establish minimum wages
In markets characterized by oligopoly,
a. the oligopolists earn the highest profit when they cooperate and behave like a monopolist. b. collusive agreements will always prevail. c. collective profits are always lower with cartel arrangements than they are without cartel arrangements. d. pursuit of self-interest by profit-maximizing firms always maximizes collective profits in the market.
The restrictive monetary policy followed by the Fed in the early 1980s
a. reduced both unemployment and inflation. b. reduced inflation significantly, but at the cost of a severe recession. c. reduced unemployment significantly, but at the cost of higher inflation. d. raised both unemployment and inflation.