Which is characteristic of a traditional economy?
a. Communities tend to be fast-growing.
b. They are usually based on light industrial production.
c. They have a high standard of living.
d. Children tend to have the same jobs as their parents did.
Ans: d. Children tend to have the same jobs as their parents did.
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If a firm finds that the wage rate (W) is less than the value of marginal product (VMP), then to maximize its profit the firm should hire
A) less labor, which will increase the VMP. B) more labor, which will decrease the VMP. C) no more or less labor, because profits are greatest when W < VMP. D) more labor, because hiring more labor will increase both W and VMP until they are equal.
Which of the following statements is true?
(a) larger countries (in terms of size) tend to be more open (in terms of larger share of exports in GDP) than smaller countries and developing countries tend to be less open than developed economies. (b) larger countries (in terms of size) tend to be less open (in terms of lower share of exports in GDP) than smaller countries and developing countries tend to be less open than developed economies. (c) larger countries (in terms of size) tend to be more open (in terms of larger share of exports in GDP) than smaller countries and developing countries tend to be more open than developed economies. (d) larger countries (in terms of size) tend to be less open (in terms of lower share of exports in GDP) than smaller countries and developing countries tend to be more open than developed economies.
From the long-run perspective of economic growth, saving
A. Shifts the production possibilities curve inward. B. Is a basic source of investment financing. C. Threatens growth because of the paradox of thrift. D. Causes the long-run aggregate supply curve to shift to the left.
Exhibit 17-2 Aggregate demand and aggregate supply curves
As shown in Exhibit 17-2, if people behave according to adaptive expectations theory, an increase in the aggregate demand curve from AD1 to AD2 will cause:
A. labor to adjust nominal wages immediately. B. the aggregate supply curve to shift from SRAS1 to SRAS2 C. the price level to eventually fall from 110 to 100. D. real GDP to rise from $6 trillion to $6.5 trillion permanently.