What is economic growth and how do we calculate its rate?
What will be an ideal response?
Economic growth is the sustained expansion of production possibilities. It is measured by the increase in real GDP over a given time period. The economic growth rate is the annual percentage change in real GDP.
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Which of the following explains how a cartel with 100 percent control might raise price to monopoly-like levels?
a. By setting a group output level equal to a profit-maximizing monopolist, and then assigning binding quota shares to cartel members. b. By setting an official price that members can secretly undercut. c. By forbidding price competition, but allowing non-cooperative rivalry in output levels. d. None of the above.
Mutually beneficial trade will occur whenever the exchange rate between the goods involved is set at a level where: a. each country can export a good at a price below the opportunity cost of producing the good in the domestic market. b. each country can import a good at a price below the opportunity cost of producing the good in the domestic market. c. the exchange ratio is exactly equal to
the opportunity cost of producing the good in each country. d. each country will specialize in the production of those goods in which it has an absolute advantage.