In a two-period model, holding everything else constant, an increase in current taxes
A) unambiguously increases the current account surplus.
B) unambiguously decreases the current account surplus.
C) has an uncertain effect on the current account surplus.
D) has no effect on the current account surplus, as long as Ricardian equivalence holds.
D
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In the aggregate production function, the symbol "A " represents an index of how efficiently the economy transforms capital and labor into real GDP. "A" measures the influence
A) of any factor that determines real GDP. B) of the quantities of capital and labor that determine real GDP. C) of any factor that determines real GDP other than the quantities of capital and labor. D) of the quantities of capital and labor that determine real GDP, holding other factors constant.
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.
Explain the economic idea that "people respond to incentives."
What will be an ideal response?
What are the marginal propensity to consume (MPC) and marginal propensity to save (MPS)? How are the two concepts related? How are the two concepts related to the consumption and saving functions?
What will be an ideal response?