Economic growth is an exponential process. What does this mean?
A. It means that the returns to huge capital investments made today will diminish at an increasing rate over time.
B. It means that small differences in sustained growth rates have significant effects on a nation's real income over long periods of time.
C. It means that countries must allocate increasing amounts of resources to capital goods to see constant increases in the growth rate of potential output.
D. It means that if a country allocates a fixed amount of resources to capital goods, its potential output will increase at an increasing rate over long periods of time.
Ans: B. It means that small differences in sustained growth rates have significant effects on a nation's real income over long periods of time.
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A person will choose to buy a good as long as
A) marginal benefit is at least as great as price. B) consumer surplus is positive. C) marginal benefit is positive. D) consumer surplus is at least as great as price.
When what people pay does not necessarily reflect the real value they put on a good, it is likely that the:
A. free rider problem does not exist. B. good will be undersupplied. C. good is easily excludable. D. not a socially desirable good.
Assume the economy is experiencing a recessionary gap. Keynesian economists would support which of the following policies:
a. Nonstabilization b. Expansionary c. Nonintervention d. Fixed wage
Currencies that are not backed by precious metals of equal value are called:
a. Legal tender. b. "Trouble" – with a capital "T." c. Near money. d. Repurchase agreements. e. Fiat money.