Suppose that average labor productivity in Country C is $5,000, and that Countries C and E have the same real GDP per capita. Based on the information in the table, what must be the average labor productivity in Country E? CountryPopulation (millions)Share of Population Employed (%)A10060B15055C7550D25045E9540
A. $1,000
B. $4,500
C. $6,250
D. $1,500
Answer: C
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At the peak of a business cycle, the
A) cyclical unemployment rate is positive. B) unemployment rate is above the natural unemployment rate. C) frictional unemployment rate is zero. D) unemployment rate is below the natural unemployment rate. E) natural unemployment rate is negative.
Consider two people, Sandy Smith, who earns $25,000 . and Gary Carver, who earns $50,000 . If the government has decided to tax everyone's first $25,000 at 20 percent and everyone's second $25,000 at 40 percent, then Gary pays:
a. $10,000 in taxes and Sandy pays $5,000 in taxes. b. $10,000 in taxes and Sandy pays $10,000 in taxes. c. $15,000 in taxes and Sandy pays $5,000 in taxes. d. $15,000 in taxes and Sandy pays $10,000 in taxes. e. $17,000 in taxes and Sandy pays $5,000 in taxes.
Suppose the government increases spending on public education by $700 million and individual spending on private education drops by $700 million. This is an example of
A) incomplete crowding out. B) complete crowding out. C) zero crowding out. D) a and c E) none of the above
The income effect
A. moves in the opposite direction from the substitution effect for an inferior good. B. is always greater than the substitution effect. C. moves in the same direction as the substitution effect for an inferior good. D. relates to increases in nominal rather than real income.