Classical growth theory predicts that increases in real GDP per person will
A) last because people make choices in the pursuit of higher profits.
B) not last because higher income encourages smaller families and a lower population growth rate.
C) not last because higher income leads to a population explosion.
D) last because higher growth leads to new technology.
E) last only if the government directs firms to make more investments in capital and new technology.
C
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One of the problems in conducting a duration gap analysis is that the duration gap is calculated assuming that interest rates for all maturities are the same. That means that the yield curve is
A) flat. B) slightly upward sloping. C) steeply upward sloping. D) downward sloping.
The fact that indifference curves are bowed in toward the origin
A) is not true. B) follows from the fact that more is preferred to less. C) follows from the property that the consumer likes diversity in his or her consumption bundle. D) follows from the property that consumption and leisure are normal goods.