QUESTION 35 Which of the following is most likely to be a ma

QUESTION 35

Which of the following is most likely to be a major source of growth in per capita GDP?

a high investment/GDP ratio

a high rate of inflation

rapid population growth

rapid growth in the money supply

2 points   

QUESTION 36

The value of money varies:

Inversely with the price level.

Directly with the volume of employment.

Directly with the price level.

Directly with the interest rate.

2 points   

QUESTION 37

Compared with fiscal policy, monetary policy is:

quicker and easier to implement.

slower and more cumbersome to implement

more dependent on Congressional action.

More likely to produce an offsetting net export effect.

2 points   

QUESTION 38

Critics of economic growth:

contend that growth and industrialization reduce pollution.

argue that economic growth does not resolve socioeconomic problems such as income inequality.

point out that growth results in greater economic security for workers.

say that its benefits acrue nearly exclusively to white males.

2 points   

QUESTION 39

We sell more merchandize goods to India than India sells to us

our balance of payment with India is positive

India\'s balance of payment with us is positive

our balance of trade with India is positive

both 1 and 3

2 points   

QUESTION 40

An example of non-tariff barrier includes

A specific tax on imported Mexican strawberries

A limit on the import of Mexican strawberries

ban on Mexican strawberries due to health concerns

all of the above

2 points   

QUESTION 41

The economist who introduced the theory of comparative advantage is

Adam Smith

J. B. Say

J. M. Keynes

David Ricardo

2 points   

QUESTION 42

Dumping is

selling below internationally accepted price

selling below cost

selling without tariff

selling in a market when there is a quota

	1.	a high investment/GDP ratio
	2.	a high rate of inflation
	3.	rapid population growth
	4.	rapid growth in the money supply

Solution

Multiple questions asked.

Answers to first 4 questions is provided below:

1.

Correct option: (1) high investment/GDP growth

As investment increases, GDP will increase, since there exists a positive relation between investment and GDP.

Also, high inflation and population would lead to reduced per capita GDP since inflation is always bad for the economy, and increased population would mean reduced per person re of GDP, resulting in reduced per capita production.

Also, a rapid growth of money supply means high inflation, resulting in poor economic growth.

2.

Correct option: (1) inversely with the price level

An increase in price level results in inflation and thus appreciated exchange rate. This refers to loss in value of currency. Also, inflation because of increased price level results in lower goods being purchased, resulting in reduced value of money.

3.

Correct option: (1) quicker and easier to implement

Monetary policies are simple and easy to adopt, since they involve either changing of rates by the Fed or engaging in open market operations. The results are also predictable, which makes the policy reliable.

Fiscal policy on the other hand involves changing tax rates or government spending. It involves a cumbersome process as to calculate how much to change, what if any economic downturn occurs or how will the economy react to the changes.

4.

Correct option: (2) argue that economic growth does not resolve socioeconomic problems such as income inequality.

Critics of economic growth states that economic growth cares about output production and consumption and expenditure made. It does not generally care about the income inequality occurring because of it (e.g. because of globalization) and the increasing wage gap.