Question

13) If private domestic saving in an economy increases, which is the most likely to occur? A) a decrease in net exports B) an increase in consumption C) an increase in imports D) an increase in private domestic investment

14) Countries can achieve continued economic growth as long as A) technological advances continue B) educational progress continues C) intelligent resource management is practiced D) all of the above

15) If a shift in the AD-curve has no impact on the price level, then A) the unemployment rate must be extremely low B) the AD-curve must be vertical C) the AS-curve must be horizontal D) the AS-curve must be vertical

Answer 1

13. Answer is D “an increase in private domestic investment”

When the private domestic savings increases, it generates more capital in the economy. This capital can be channelized for productive activities and investments in the economy.

14. Answer is “all of the above”

Technological advancements, educational progress, resource management are all part of sustained economic growth.

15. Answer is “The AS curve must be horizontal”

When shift in AD has no impact on Price level than it reflects that the economy is in recessionary gap and the short run Keynesian supply curve is horizontal in short run due to sticky price level.