Economic freedom is a precondition for economic growth. Which of the following is a characteristic of economic freedom?
i. A democratic form of government
ii. Property rights must be protected.
iii. The government must support and pay for inventions and innovations.
A) i only
B) ii only
C) Both ii and iii
D) Both i and ii
E) Both i and iii
B
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A perfectly competitive industry achieves allocative efficiency in the long run. What does allocative efficiency mean?
A) Firms use an input combination that minimizes cost and maximizes output. B) Each firm produces up to the point where all scale economies are exhausted. C) Each firm produces up to the point where the price of the good equals the marginal cost of producing the last unit. D) Production occurs at the lowest average total cost.
Suppose that over the past year, the real interest rate was 6 percent and the inflation rate was 4 percent. It follows that
a. the dollar value of savings increased at 6 percent, and the purchasing power of savings increased at 2 percent. b. the dollar value of savings increased at 6 percent, and the purchasing power of savings increased at 10 percent. c. the dollar value of savings increased at 10 percent, and the purchasing power of savings increased at 2 percent. d. the dollar value of savings increased at 10 percent, and the purchasing power of savings increased at 6 percent.
Assume the MPC is 0.80. The change in total spending for the economy due to a $200 billion government spending increase is
A. $800 billion. B. $200 billion. C. $1 trillion. D. $160 billion.
Foreign aid:
A. provided by developed countries to developing countries represents about 10 percent of the GDP of developed countries. B. is an important source of funding for investment in most developing countries. C. does not contribute much to domestic investment in most developing countries. D. is largely wasted in most developing countries because it comes with no strings attached.