What is economic growth and why are growth rates so important?
What will be an ideal response?
Economic growth is measured by increases in per capita real Gross Domestic Product (GDP). Economic growth results in a higher standard of living, measured in production of new final goods and services, for the average member of society. Sustained small increases in the growth rate of per capita real Gross Domestic Product (GDP) can lead to large absolute increases in per capita real Gross Domestic Product (GDP) due to the power of annual growth compounding.
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The consumption function describes the relationship between
A) investment and interest rates. B) consumer spending and income. C) consumers and firms. D) prices and demand.
The price level in the economy between 2014 and 2015 rose from 100 to 110. Between 2015 and 2016, the price level rose from 110 to 121. How does the short-run Phillips curve predict the unemployment rate will change as a result?
A) The unemployment rate will increase since inflation increased. B) The unemployment rate will decrease since inflation increased. C) The unemployment rate will decrease since inflation decreased. D) The unemployment rate will not change since there is no change in the rate of inflation.