Describe the Malthusian Cycle
What will be an ideal response?
Malthusian cycle refers to the preindustrial pattern in which increases in aggregate income lead to an expanding population, which in turn reduces income per capita and puts a downward pressure on population. The cycle starts with an increase in GDP above the subsistence level, which in turn fuels population growth, which increases the pressure on existing resources and reduces GDP per capita.
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Adam Smith’s diamond-water puzzle
A. can be resolved by distinguishing between marginal and total utility. B. occurs because diamonds have no utility. C. occurs because scarcity increases total utility. D. will likely never be resolved with existing economic tools.
If real GDP grows from $10 trillion in 2002 to $10.5 trillion in 2003, the growth rate for real GDP is
A) 5%. B) 10%. C) 50%. D) 0.5%.
Pollution and other negative exernalities arise because there are no practical, enforceable, private property rights to open-access resources, such as air
Indicate whether the statement is true or false
In all cases, positive economics deals with
A) what is. B) what should be. C) relatively small units in the economy. D) aggregates or the entire economy.