Figure 10-18
As shown in , the economy's point of short-run equilibrium, given by the shift of the aggregate demand curve from AD1 to AD2, is
a.
E1.
b.
E2.
c.
E3.
d.
unable to be determined.
b
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Consider two economies with the same GDP per capita: Barylia and Lithasia. The savings rate in Barylia is 20% while the savings rate in Lithasia is 60%
a. Which of these two countries is likely to accumulate capital faster? b. The government in Barylia decides to provide incentive to its citizens to increase the savings rate further to 80% as a means to improve standards of living. Will the increase in savings and thus investment and output translate into improvements in the standard of living?
A curve that shows all the combinations of two inputs, such as labor and capital, that will produce the same level of output is called
A) a budget line. B) an isocost line C) an isoquant. D) an optimal input combination curve.