1) Assume China in 2008 has a per-capita income of$3000 and the U. S. has a per-capita income
of $40,000.Between 2008 and 2028 China grows at 9 percent while the U. S. grows at 2
percent. The per-capita income of China in 2028 will be and that of the U. S. will be
a) 18148; 59672
b) 10148; 69672
C) 10148; 59672
d) 18148; 69672
2) If output is growing at 5% annually, how many years will it take for output to reach 4
times its original level?
a) 28 years
b) 14 years
C) 10 years
D) 20 years
3) The required reserve ratio in an economy is 10%. By how much do bank deposits
increase after an increase of 300 in bank reserves? (Assume that this economy uses no
d) none of the above
4) In a closed economy government spending was $30 billion, consumption was $70 billion,
taxes were $20 billion, and GDP was $110 billion this year. There were no transfers.
Investment spending was $10 billion. As a result:
a) private savings were equal to $20 billion
b) private savings were equal to $10 billion
c) the government's budget balance was equal to a surplus of $10 billion
d) net savings were equal to $0
5) If the marginal propensity to consume is 0.9, then the tax multiplier will be:
a) less than 10.
b) impossible to determine
c) greater than 10.
d) zero, because there is no multiplier effect from taxes.
Please kindly provide a detail solution/ explanation for the question. Thank you
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