29. Erbia is a developing country. Erbia’s neighbor Glassen is also a developing

Question

29. Erbia is a developing country. Erbia’s neighbor Glassen is also a developing country, which is growing at a fast rate by adopting existing technology. Unlike Glassen, Erbia is not growing as fast as it should. Which of the following could be one of the reasons for the slower growth in Erbia?

                a.            Erbia lacks a reliable source of electricity to power new technologies.

                b.            Erbia has adopted an export-oriented trade policy.

                c.             The manufacturing sector is the highest contributor to Erbia’s national income.

                d.            Erbia has a low birth rate, and therefore, population growth has slowed in Erbia.

                e.            Erbia has invested heavily in consumer products.

36. The supply of loanable funds comes, in part, from _____.

                a.            consumer saving

                b.            business investment

                c.             the federal government

                d.            current consumption

                e.            future consumption

46. In the United States, the dramatic increase in government social spending since the mid-1960s has:

                a.            made the distribution of income more unequal in the economy.

                b.            brought about equality in the distribution of income in the economy.

                c.             not greatly increased the money income share of the poorest fraction of the population.

                d.            greatly increased the money income share of the richest fraction of the population.

                e.            decreased the percentage of families in the lowest fifth.

48. Which of the following resources is necessary to efficiently combine other resources to produce goods and services?

                a.            Natural resources

                b.            Capital

                c.             Labor

                d.            Entrepreneurial ability

                e.            Financial institutions

Explanation / Answer

29> e

Reason

The more the investment on capital goods, the growth will be higher.

36> c the federal government

Reason

The equilibrium interest rate is not only influenced by the propensities to save and invest but also by the creation or destruction of fiat money and credit.

46> d.            greatly increased the money income share of the richest fraction of the population.

Reason

Social expenditure comprises cash benefits, direct in-kind provision of goods and services, and tax breaks with social purposes. These are not pro-poor policies.

48> b. c

Both capital and labor is necessary for production.

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