"If country A has a higher level of real GDP per person than country B, then people in Country A must enjoy a higher standard of living than people in Country B." Is this statement true or false? Explain your answer
What will be an ideal response?
The statement is false. Factors other than real GDP per person affect the standard of living. For instance, factors such as household production, underground production, leisure time, and environmental quality all affect the standard of living and all are omitted from real GDP per person. In addition, the standard of living is influenced by health and life expectancy as well as by the nation's political freedom and social justice, none of which is measured by real GDP per person. Although real GDP per person is an important factor in determining a country's standard of living, it is not the only factor.
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Health problems prevent people from working harder, which can lower a country's total income. This indicates that in effect, health problems
A) shift a country's production possibilities frontier inward. B) increase the incentive to work. C) decrease consumer surplus. D) are a primary cause of price decreases.
The Federal Reserve can tightly control
a. cash in the hands of the public b. cash in the hands of the public and demand deposits c. demand deposits d. funds in savings accounts and checking accounts e. borrowing by the government
With collateralized debt obligations (CDOs) buyers are purchasing _________ slices, and buyers of mortgage-backed securities (MBSs) purchase ___________ slices
A) unequal; equal B) equal; equal C) unequal; unequal D) equal; unequal
Economic profit is the difference between
A. accounting profit and explicit costs. B. total revenue and the opportunity cost of all of the resources used in production. C. total revenue and the implicit costs of using owner-supplied resources. D. accounting profit and the opportunity cost of the market-supplied resources used by the firm.