The steady state level of income per person in a country is a function of all the following EXCEPT:
a. the population growth rate.
b. the rate of saving.
c. the efficiency with which the economy employs the factors of production.
d. the current level of income in the country.
Answer: d. the current level of income in the country.
Explanation: The current level of income does not tell us what the steady-state level of income will be in the long run. Conditional on the steady state, countries with lower initial income will grow more rapidly
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Generally, opportunity costs increase and the production possibilities frontier bows outward. Why?
A) Unemployment is inevitable. B) Resources are not equally useful in all activities. C) Technology is slow to change. D) Labor is scarcer than capital.
Which of these statements is a fundamental part of Keyneisan economics?
a. the federal government should have a balanced budget every year to protect economic growth b. the government can use of deficit spending to increase aggregate demand pull the economy out the reccession c. the economy will only reach equilibrium and prosperity through the self regulation of the free market