What could explain why South Korea's gross domestic product (GDP) per capita increased so much faster since the 1970s than North Korea's GDP per capita?
What will be an ideal response?
One of the factors that could explain the divergence between South Korea's and North Korea's per capita GDP is the fact that South Korea is a market economy while North Korea is a command economy. The price mechanism allocates resources in market economies to their most efficient use. It also aligns the incentives of sellers and buyers. Central planners in command economies, however, face coordination and incentive problems. The central planner does not fully understand consumer wants and the production capabilities of every sector of the economy, and it is difficult to provide workers with appropriate incentives.
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Tom is going to quit his job to pursue his PhD in economics, which will take him 6 years to complete. He currently makes $55,000 per year as a high school teacher
While going to school, he will receive a stipend of $24,000 per year plus $6,000 per year to help cover food and rent. His living expenses are the same regardless of what he does. What is Tom's opportunity cost of pursuing his PhD? A) $150,000 B) $180,000 C) $186,000 D) $330,000
An increase or decrease in taxes will have a multiplier effect on equilibrium GDP on the demand side.
Answer the following statement true (T) or false (F)