Question

6. Which of the following statements is (are) correct?

(x) If the price of copper in Rockland increased by three percent in 2012 and the overall price level in Rockland increased by five percent, then the real price of copper in Rockland increased in 2012.

(y) The behavior of market prices over time show that natural resources are not a limit to economic growth since the prices of most natural resources are stable or falling relative to other prices.

(z) In a market economy, we know that a natural resource has become scarcer when its price rises relative to other prices.

A. (x), (y) and (z)

B. (x) and (y) only

C. (x) and (z) only

D. (y) and (z) only

E. (y) only

7. Which of the following statements is (are) correct?

(x) Bold Brewing produced 2,000 bottles of ginger ale each day in 2011. It employed 10 workers each working 8 hours a day. In 2012, it produced 1920 bottles of ginger ale each day employing 8 workers who worked 8 hours each day. Productivity at Bold Brewing increased by 20 percent in 2012.

(y) In 2011, ABC Electronics produced 90,000 calculators, employing 80 workers, each of whom worked 8 hours per day. In 2012, the same firm produced 114,750 calculators, employing 85 workers, each of whom worked 10 hours per day. Productivity at ABC Electronics decreased by 4 percent in 2012.

(z) Best Green Foods produced 426,850 cans of green beans in 2011 and 443,924 cans of green beans in 2012. Labor hours at Best Green Foods increased by 4 percent in 2012. Productivity at Best Green Foods was unchanged in 2012.

A. (x), (y) and (z)

B. (x) and (y) only

C. (x) and (z) only

D. (y) and (z) only

E. (x) only

8. Which of the following statements is (are) correct?

(x) New products are invented every year that enhance the standard of living. Consequently real GDP growth probably underestimates the rate of real economic growth.

(y) A government can encourage growth and, in the long run, raise the economy's standard of living by encouraging saving and investment.

(z) Across countries, investment and growth rates are positively related for rich countries, but negatively related for poor countries

A. (x), (y) and (z)

B. (x) and (y) only

C. (x) and (z) only

D. (y) and (z) only

E. (y) only

Answer 1

6.answer:

x is incorrect. because price of copper increased but relative to the other products the price growth was rather low(3% compared to 5%). hence it only got cheaper.

y is also correct because natural resources are so far not behaving like a constraint to economic growth. their price remaining stable means that they are also not getting scarce with time.

z is correct. as supply decreases price will incease.

hence correct option is D.

7. answer:

x is correct.

because in 2011 in 8 hours 10 workers made 2000 units. hence 1 worker made 20units in 8hours.

in 2012 in 8 hours 8 workers made 1920 units. that means 1 worker made 24 units in 8 hours.

hence incease in productivity= (24-20)/20=4/20=20%

y is correct because

In 2011,ABC Electronics produced 90,000 calculators, employing 80 workers, each of whom worked 8 hours per day

hence one worker in one hour produced =90000/(80x8)=1125/8 units=140.625units

. In 2012, the same firm produced 114,750 calculators, employing 85 workers, each of whom worked 10 hours per day.

hence one worker in one hour produed= 114750/85x10=135units

hence produtivity change= (135-140.625)/140.625= -4%

z is also correct

Best Green Foods produced 426,850 cans of green beans in 2011

and 443,924 cans of green beans in 2012.

rate of increase in production= (443,924-426850)/426850=4%

Labor hours at Best Green Foods increased by 4 percent in 2012.

as increase in production=increase in labour hour=4%

hence productivity remained the same.

hence correction option is A.

8 answer:

x) New products are invented every year that enhance the standard of living. Consequently real GDP growth probably underestimates the rate of real economic growth.

this statement is not true. because calculating real GDP consists of takig account of production of all kinds of goods and services. hence new inventions are taken into account in the real GDP.

(y) A government can encourage growth and, in the long run, raise the economy's standard of living by encouraging saving and investment.

this statement is true. more savings and investment means more technological growth and knowledge and it will enhance the risk taking capacity and opens doors for new opportunities. hence government can increase long run growth by enocouraging savings and investment.

(z) Across countries, investment and growth rates are positively related for rich countries, but negatively related for poor countries

this statement is false. because in the poor countries also, as growth takes place investment increases.

hence the correct option is E.

I hope it helped you. Wish you a great day ahead.

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