Explain how a well-functioning financial system can increase total factor productivity and promote economic growth
What will be an ideal response?
The financial system can influence the efficiency of the economy, which means it can influence total factor productivity. Financial systems match borrowers with lenders and therefore help allocate resources in an economy. By allocating funds to the individuals who are willing to pay the most to obtain the funds, which generally means their investment projects have the best likelihood for success, a good financial system ensures that resources flow to their most productive uses which increases total factor productivity. This results in increased labor productivity and a higher standard of living.
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Country A limits other nations' exports of coal to Country A to 1,000 tons of coal annually. This is an example of a(n)
A. export subsidy. B. voluntary export restriction. C. protective tariff. D. import quota.
Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas, gasoline, and heating oil prices
Three years later, once the refining capacity was restored, these prices came back down. The restoration of refining capacity should A) move the economy up along a stationary short-run aggregate supply curve. B) move the economy down along a stationary short-run aggregate supply curve. C) shift the short-run aggregate supply curve to the left. D) shift the short-run aggregate supply curve to the right.
What is investment in human capital?
For a large group of individuals, the proportion of people who will have accidents is
A. extremely unstable. B. extremely predictable. C. always constant. D. extremely unpredictable.