Suppose there is a reduction in the saving rate. Explain what effect this will have on output, output per worker, the rate of growth of output, and the rate of growth of output per worker
What will be an ideal response?
The reduction in s will cause a decrease in S/N and I/N. At the initial K/N, depreciation is more than investment. Alternatively, there is not enough investment to offset the amount of capital that wears out. So, the capital stock will decrease. This will cause a decrease in K/N, Y/N, and S/N. As Y/N falls, so will C/N.
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Differentiate between the two types of altruism
What will be an ideal response?
Which of the following correctly describes the result of a price increase for an inferior good?
A) The substitution effect causes the demand for the good to decrease; the income effect causes the demand for the good to increase. B) Both the substitution effect and the income effect cause the consumer to buy less of the good. C) The substitution effect causes the demand for the good to increase; the income effect causes the demand for the good to decrease. D) The substitution effect causes the consumer to buy less of the good and the income effect causes the consumer to buy more of the good.
On which of the following does the neoclassical counter-revolution school most blame underdevelopment?
a. misguided government policies b. relatively rigid cultural traditions c. the legacy of colonialism d. unfair trade practices on the part of developed countries
The Economic Stabilization Act of 1970 gave private industry the right to establish wage and price controls, but President Nixon vetoed this power
Indicate whether the statement is true or false