The catch-up effect refers to the idea that
a. saving will always catch-up with investment spending.
b. it is easier for a country to grow fast and so catch-up if it starts out relatively poor.
c. population eventually catches-up with increased output.
d. if investment spending is low, increased saving will help investment to "catch-up."
b
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Suppose that the market for steel is shown in the above figure. Is social welfare greater under monopoly or under competition?
What will be an ideal response?
The owner of a perfectly competitive firm is currently earning an economic profit of zero. This owner
A) should shut down since profits of zero are not good. B) should raise the price of the product to increase profits. C) is covering all of his fixed costs. D) will continue producing in the short-run but will shut down in the long run if profits do not increase.