When an economy experiences significant economic growth:
a. a negative relationship exists between output per capita and adult literacy rates.
b. an indirect relationship exists between output per capita and adult literacy rates.
c. a direct relationship exists between output per capita and adult literacy rates
d. no observed relationship exists between output per capita and adult literacy rates.
c. a direct relationship exists between output per capita and adult literacy rates
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Describe and explain the policy irrelevance proposition
What will be an ideal response?
If people's expectations about future income improve so they think their future income will be higher than previously believed, then the AD curve
A) will not shift, but potential GDP will increase. B) will shift leftward because people will spend less now. C) will shift rightward because people will increase spending now. D) and the AS curve will both shift leftward because people will increase their saving. E) will not change until income actually rises.