Why are high domestic savings rates important?
What will be an ideal response?
High savings rates are correlated with high domestic investment.
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In the endogenous growth model presented in the text, suppose that u represents the fraction of time spent working (as opposed to accumulating human capital) and b represents the efficiency of human capital accumulation
The growth rate of human capital equals A) u(1 - b) - 1. B) 1 + b(1 - u). C) (1 + b)(1 - u). D) b(1 - u) - 1.
Consider a large open economy that has a positive current account balance. (a)Suppose the domestic government increases the tax rate on firm revenues. Draw a diagram to explain the effects on the world real interest rate, saving in each country, investment in each country, and the current account balance in each country in equilibrium. Explain your work.(b)In addition to the tax increase in part (a), suppose now that the foreign government increases lump-sum taxes on individuals. Draw a new diagram to incorporate the overall effects of both tax changes and explain the effects (from the initial equilibrium with neither tax change) on the world real interest rate, saving in each country, investment in each country, and the current account balance in both countries. Explain your work.
What will be an ideal response?
How can money be “destroyed” in the same way that check able deposits expand the money supply?
What will be an ideal response?
Which of the following is NOT a reason why a monopoly might be regulated?
A. To reduce the inefficiency associated with profits B. To limit prices in important markets with economic or political consequences C. To deal with the negative consequences of government-created monopolies D. To ensure that a good is produced at least cost