A family purchases a package of sandwich buns at a supermarket. Are those buns considered a "final" good?
A) No, because they are an intermediate ingredient in the actual final good: sandwiches.
B) Yes, if the family eats them and does not sell the sandwiches made from them.
C) No, because the supermarket bought the finished buns, so they are "used" goods by the time the family buys them.
D) Yes, for so long as it is sold on the market it is a final good.
B
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Paul Romer's theory of economic growth differs from traditional theories in that
A) Romer argues an investment-knowledge cycle can exist, but requires constant increases in investment rates, while traditional theories argue that investment rates can be constant. B) Romer argues that investment in human capital always occurs before investment in physical capital, while traditional theories emphasize the priority of physical capital. C) Romer argues an investment-knowledge cycle allows a one-time increase in investment to permanently increase a country's growth rate, while traditional theory argued such an investment would have only a short-term effect. D) Romer argues that investment in capital goods is not important in encouraging growth while investment in human capital is, whereas traditional theorists emphasize both human and physical capital.
Compared to a system of fixed exchange rates, currency unions are beneficial because they
A) allow exchange rates to float. B) allow every country to have an independent monetary policy. C) reduce the costs of trading goods and assets. D) restrict what countries can do with fiscal policy.