If an economy maintains a small rate of growth for a long period of time, then the size of the economy:
A. can only increase by a small amount.
B. will stay nearly constant.
C. can increase by a large amount.
D. can never double.
Answer: C
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Refer to Figure 8.5. An efficiency wage in this economy would be represented by a real wage of ________ and an employment level of ________
A) w1; L1 B) w1; L2 C) w2; L1 D) w2; L3
If resources are limited:
A.) People will rush to buy more goods than they would otherwise. B.) Businesses will sell more products than they would otherwise. C.) There will be tradeoffs whenever choices are made. D.) All individuals are deprived of basic necessities.
Preferences have just shifted away from beef and into mutton. If you are a sheep rancher, the best profit-maximizing strategy is to
A. shut down. B. cut prices to increase market share. C. produce as much as possible to earn profits in the short run. D. shift some of your ranching capacity into cattle raising.
Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher