An economy is statically efficient if it is operating:
a. On its production possibilities frontier
b. On its Lorenz Curve
c. On its Friedman curve
d. On its Samuelson curve
e. All of the above
Question 2 - If the price of inputs rises and personal income taxes rise:
a. Aggregate demand rises and aggregate supply falls.
b. Aggregate demand rises, but aggregate supply does not change.
c. Aggregate demand falls and aggregate supply rises.
d. Aggregate demand rises and aggregate supply rises.
e. Aggregate demand falls and aggregate supply falls.
Question 3 - Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and current international transactions balance in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium.
a. The GDP Price Index falls and current international transactions balance becomes more negative (or less positive).
b. The GDP Price Index rises and current international transactions balance becomes more negative (or less positive).
c. The GDP Price Index and current international transactions balance remain the same.
d. The GDP Price Index rises and current international transactions balance remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 4 - China's pattern of economic growth can be characterized as:
a. Slow
b. Labor growing rapidly relative to capital
c. Rising capital labor ratios
d. Rapid growth of capital
e. Both c and d
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