Question

If the country’s unemployment rate is 5.9% and inflation rate is 1.6%, what is the misery index for that country?

Question 7 options:

1)

7.50%

2)

9.44%

3)

4.3%

4)	Cannot be computed from the information provided in the table

Question 8 (2.5 points)

Capital flight is

Question 8 options:

1)	an environment in which well-connected unscrupulous business people use corrupt political systems to their advantage in order to obtain preferential treatment from government

2)	an environment in which property rights and contracts are respected and administered fairly and transparently, without favoritism

3)	a conjecture that poor countries will remain poor since they do not have sufficient resources available to make the investments in capital which are necessary for economic growth

4)	tendency for wealthy people in poor countries to invest their financial capital abroad instead of at home

Question 9 (2.5 points)

Consider a country with consumption expenditures, private investment expenditures, government purchases, imports, and exports as summarized in the table below (each measured in millions of dollars):

Consumption expenditures	Investment expenditures	Government purchases	Imports	Exports
$797	$112	$235	$86	$104

For this country, “Gross Domestic Product (GDP) ” is equal toQuestion 9 options:

1)	$18 million

2)	$234 million

3)	$1,334 million

4)	$1,162 million

Answer 1

7. Option 1. 7.50%

Explanation: Misery index = unemployment rate + inflation rate = 5.9% + 1.6% = 7.5%

8. Option 4

Explanation: In capital flight, the capital flows out of the economy because of an absence of good investment opportunities.

9. Option 4.

Explanation: GDP = Consumption + Investment + Government purchases + Net export = Consumption + Investment + Government purchases + (Export - Import) = $797 + $112 + $235 + ($104 - $86) = $797 + $112 + $235 + $18 = $1,162.