What causes a person, or a nation, to be poor? Why are there poor people in rich countries, and rich people in poor countries?
What will be an ideal response?
Students may want to focus on natural resources and capital goods, but should emphasize human capital, especially education and acquisition of skills. Such an emphasis can help explain both parts of the question.
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If two interdependent economies work independently pursuing the best interests of their own economies
A) both countries can end up worse than they planned because of international externalities. B) they will make other economies more vulnerable to international externalities. C) they will have to sacrifice their monetary autonomy to achieve their goals. D) both countries can end up worse than they planned because of the liquidity effect.
Medicare subsidies will cause people to
A) perceive the price they pay per unit of medical services to be lower than the price received by the provider. B) perceive the price they pay per unit of medical services to be higher than the price received by the provider. C) perceive the price they pay per unit of medical services to be exactly equal to the price received by the provider. D) demand fewer services.
Refer to above Table 2-1. What is the level of National Income?
A) 2630 B) 2420 C) 2660 D) 2430
Which of the following is NOT an example of an externality?
A) A bread company emits a wonderful aroma in the air that makes people smile. B) The neighbor's wind chimes interfere with your sleep. C) A firm fires 500 people. D) Cancer-causing chemicals are dumped into the drinking water supply of a city.