In the absence of technological progress, we know with certainty that an increase in the saving rate will cause which of the following?
A) increase steady state consumption
B) decrease steady state consumption
C) have no effect on steady state consumption
D) increase steady state consumption only if the increase in saving exceeds the increase in depreciation
E) increase steady state consumption only if the increase in saving is less than the increase in depreciation
E
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A computer sells for $800 in the United States and for 600 British pounds in England. Given an exchange rate of 0.65 British pounds = $1, how do the computer prices of these countries compare?
a. The computer sells for the same price in both countries. b. The computer costs $923 more in the United States. c. The computer costs $95 more in England. d. The computer costs $124 less in the United States. e. The computer costs $124 less in England.
Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The workers in Country B will benefit from trade if they:
A. specialize in bananas because they have an absolute advantage in banana production. B. specialize in tomatoes because their opportunity cost of tomatoes is higher than Country A's. C. specialize in tomatoes because their opportunity cost of tomatoes is lower than Country A's. D. specialize in bananas because they have a comparative advantage in banana production.
Why does the Federal Reserve System have a high degree of political independence?
(A) The system has only advisory power. (B) The system is owned by the banks. (C) It is divided into geographical districts. (D) The governors are appointed for life terms.
The high-school dropout rate usually declines in an economic recession because
A) a decline in job opportunities lowers the opportunity cost of remaining in high school. B) high schools begin to offer more practical and relevant courses. C) laws are passed to prevent teenagers from entering the labor market. D) recessions increase the demand for education. E) tuition and book prices usually fall in a recession.