Define economic growth and discuss why economists typically measure economic growth in terms of real GDP per capita. Give an example of how per capita GDP growth and GDP growth differ.
What will be an ideal response?
but students should include a definition of economic growth as a sustained rise in a nation’s production of goods and services, resulting from investments in human and physical capital, research and development, technological advances, and improved institutional arrangements and incentives. Answers should also demonstrate understanding of how focusing on per capita growth enables economists to isolate the impact of population growth on economic growth. An example of the difference between per capita GDP growth and GDP growth should highlight that a growing population can lead to GDP growth even as GDP per capita is flat or falling.
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When a central bank makes joint decisions with the government's Treasury department,
A) the central bank is asserting its independence. B) the government loses its ability to conduct fiscal policy. C) the central bank risks losing credibility. D) the government enhances its credibility.
The difference between savings and investment is that a. investment is purchasing stock, while savings is putting money in a bank. b. investment is purchasing capital, savings is postponing consumption. c. investment is purchasing assets, while consumption is purchasing goods. d. investment increases output, while savings decreases output
Figure 4.1
One problem with assets bubbles is that while it is easy to identify them as such in retrospect, it is not easy to do so in advance
a. True b. False
In the short run, there are large and persistent deviations between actual exchange rates and exchange rates predicted using purchasing power parity because of:
a. Discretionary monetary policy. b. International capital flows could cause short-term differences. c. Discretionary fiscal policy. d. Widely different inflation rates in the two nations. e. None of the above.