Which one of the following statements about growth theories is CORRECT?
A) In the new growth theory, knowledge is not subject to diminishing returns.
B) In neoclassical growth theory, technological progress is the result of rapid increases in saving and investment in capital per person.
C) In classical growth theory, real GDP per person is unrelated to the subsistence real GDP.
D) In classical growth theory physical resources are unlimited.
A
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
In the economic way of thinking, an example of "capital" might include
A) literacy. B) natural resources. C) knowledge. D) stable rules of the game. E) all of the above.
If firms in a monopolistically competitive industry experience short-run losses
A) some firms would like to exit the industry but find they cannot. B) firms increase prices further, until they make at least a normal return. C) firms increase advertising spending to increase demand, until they make at least a normal return. D) some firms exit the industry, causing the demand curves for the remaining firms to shift to the right until they earn a normal profit.
When taxes or subsidies on a particular product are introduced into the general equilibrium model we can be sure that
A. subsidies make the product appear too cheap to its producer. B. we get too much of the subsidized product and too little of the taxed product. C. a more fair allocation of resources is possible. D. taxes make the taxed product appear too expensive to its producer.