Part 1. True/False Questions. Please put T for true and F for False for each of
ID: 1221988 • Letter: P
Question
Part 1. True/False Questions. Please put T for true and F for False for each of the following statements (one mark each).
1- Productivity levels are higher in rich countries compared to poor countries
2- Productivity growth rates are usually higher in rich countries than in poor countries
3- Capital investment becomes more profitable for business firm as the real interestrate decreases
4- In a simplified circular flow model total expenditure can be written as: C + I + G + (X-M)
5- High unemployment and high rates of inflation are examples of coordination success
6- When income rises, total expenditures remain the same
7- Equilibrium GDP occurs when total spending equals total output
8- The equilibrium level of GDP is always accompanied by full employment and stable prices
.
9- When equilibrium GDP is greater than potential GDP, jobs are plentiful and labor is in great demand
10- Recessionary gaps usually lead to below full employment rates
Explanation / Answer
1. True
Productivity in rich and the poor countries are comparatively larger in sectors which are rich countries because they require good and efficient labour and with the nice research and development (R&D)
2. False
Productivity growth rate is much higher in poor countries as compared with the rich countries, then the poor countries which close the gap as compared rich ones.
3. True
If the capital rate is cheap which results the investment more attractive with the higher demand which will increase the profit for capital investment.
4. False
Total Expenditure flow in the economy which is the sum of the consumption expenditure(C), investment expenditure(I) and government expenditure(G).
Total Expenditure = C+I+G