Real GDP per person in Richland is $20,000, while real GDP per person in Poorland is $10,000. However, Richland's real GDP per person is growing at 1 percent per year, and Poorland's real GDP per person is growing at 3 percent per year. After 50 years, real GDP per person in Richland minus real GDP in Poorland is:
A. positive but less than $10,000.
B. zero.
C. negative.
D. positive and greater than $10,000.
Answer: C
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A debtor nation is a country that
A) during its entire history has consistently run a capital account deficit. B) borrows more from the rest of the world than it lends to it. C) lends more to the rest of the world than it borrows from it. D) during its entire history has invested more in the rest of the world than other countries have invested in it. E) during its entire history has borrowed more from the rest of the world than it has lent to it.
Middlemen would serve no productive function if
A) information is scarce and transactions costs are zero. B) information is free and transactions costs are significant. C) information is free and transactions costs are zero. D) people only purchased what they need, rather than what they want.
Which part of the Federal Reserve System meets every 6 weeks to determine the nation's monetary policy?
A) Federal Open Market Committee B) Board of Governors C) the Federal Reserve Banks D) depository institutions such as commercial banks
Under pressure from Japan, the United States, and Europe, China announced it switched from pegging the yuan against the dollar to linking the value of the yuan to a 'basket' of currencies. The result of this change was
A) the value of the yuan increased slightly relative to the dollar. B) the value of the yuan has increased dramatically and is beginning to remove the trade imbalance between the United States and China. C) the value of the yuan has become very responsive to changes in demand and supply in the foreign currency market. D) the value of the yuan has decreased dramatically and has further spurred Chinese exports.