Describe some of the causes of urban giantism in developing countries
What will be an ideal response?
The hub and spoke transportation system, avoiding transportation costs, location of industry in the political center, and the import substitution strategy that led firms to want to locate close to the local market.
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The natural rate hypothesis concludes that when the inflation rate increases, then in the long run there is
A) an upward movement along the short-run Phillips curve. B) an upward shift of the short-run Phillips curve. C) a downward shift of the short-run Phillips curve. D) no change at all in the short-run Phillips curve. E) a downward movement along the short-run Phillips curve.
When a positive externality is present in a market, total surplus is:
A. higher when buyers receive a Pigouvian subsidy for the externality. B. lower when buyers receive a Pigouvian subsidy for the externality. C. higher when buyers only consider private benefits. D. Any of these statements could be true.
As the outstanding debt of a nation becomes very large relative to the size of the economy,
a. the borrowing cost of the government will decline. b. lenders will have no choice but to hold the outstanding bonds and to buy the new ones as they are offered. c. a country like the United States will have no choice but to default on the payments to bond holders. d. if the country has a central bank, it will almost certainly resort to money creation to service the debt rather than directly default.
Suppose that aggregate consumption is $1,000,000, aggregate investment is $200,000, government spending is $300,000, the value of exports is $100,000, and the value of imports is $200,000. What is the value of Gross Domestic Product (GDP)?
What will be an ideal response?