Classical growth theory predicts that economic growth
A) is merely an illusion.
B) will continue at the classical rate of 3 percent forever.
C) occurs because of hard-working citizens.
D) decreases the supply of labor.
E) will eventually stop because of population growth.
E
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Behavioral economists argue that asset price bubbles and other examples of herd behavior may be due to biases resulting from the law of small numbers
In particular, the investors may observe unusually ________ returns for some asset and use this limited information to ________ the probability that returns will be high in the future. A) low, over-estimate B) low, under-estimate C) high, over-estimate D) high, under-estimate
The production possibilities curve can shift inward when
A) production increases. B) employment increases. C) the stock of productive capital rises. D) a country experiences a natural disaster.
________ is the ability to produce more of a good or service than competitors when using the same amount of resources
A) Absolute advantage B) Comparative advantage C) Trade superiority D) Trade autarky
In short-run equilibrium in a perfectly competitive market,
a. the price varies along the market supply curve b. each consumer can buy whatever quantity he wishes to buy at the market price c. the price varies along the market demand curve d. the market demand curve is horizontal e. the market demand curve is vertical