What was the main cause for the reversal-of-fortune of many countries?
What will be an ideal response?
The reversal-of-fortune can be attributed to the nature of the institutions set up in European colonies around the world. European colonialism was driven by profit motive, and hence, they set up extractive institutions in places that were previously more developed. This drained out the economic prosperity from these well-performing nations and reversed their fortunes. On the other hand, inclusive institutions were set up in places that were previously less developed. This encouraged growth and reversed their fortunes.
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To reduce economic volatility the Fed should push the economy toward a
A) positive output ratio. B) negative output ratio. C) zero output ratio. D) All of the above are consistent with reduced volatility.
A mixed economy
a) allocates resources according to supply but not demand. b) allocates resources according to demand but not supply. c) allocates resources according to demand and supply. d) allocates resources according to market forces and government intervention.
For public goods, in general, the optimal output level is found where the marginal benefits of additional production equal marginal cost
a. True b. False
If a homeowner sells a kitchen table and chairs that she no longer wants to use and does not report the income earned from the sale to the Internal Revenue Service, the value of GDP is
A. understated because this transaction took place in the underground economy. B. overstated because the sale of the furniture is counted twice in GDP calculations. C. unaffected by this transaction because the table and chairs were already counted in GDP as final goods when the homeowner bought them new. D. understated because this purchase was a nonmarket transaction.