The effect of opening trade between countries is
A. living standards rise in the country with efficient, high-pay workers.
B. both countries can exploit comparative advantage and increase productivity.
C. total world production increases as both countries specialize in specific goods.
D. All of the above are correct.
Answer: D
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The gross domestic product of Neonland is 450,000 neons. It has a total population of 1,500. 30% of the total population in Neonland comprises of retired workers, 50% of the population is employed, and the remaining are unemployed children
i) Calculate the income per capita of Neonland. ii) What is the income per worker of Neonland? iii) Is there a difference between the two measures? If yes, explain the reason behind this difference.
Investment in both physical and human capital tends to enhance economic growth because it generally
a. increases consumption during the current period. b. makes it possible for individuals to produce more goods and services per hour worked. c. encourages firms to expand output by employing more low productivity workers. d. encourages workers to unionize and thereby fight for higher wages.