Chapter 13 Why Do Economies Grow?

| November 9, 2018

33)
In a simple economy without government or the foreign sector, saving must equal
investment because output is divided into consumption and investment, and
income is either consumed or saved.

34)
Assuming full employment, if the private sector saves 8% of its income and the
government raises taxes by $500 to finance public investments, total investment
will increase by $460.

35)
If a country runs a trade deficit to finance increased current consumption, it
will have to increase consumption in the future to pay back its borrowings.

36)
A larger labor force will allow the economy to produce more total output.

37)
The point of diminishing returns means that output will decrease at an
increasing rate.

38)
Explain the impact of capital deepening on workers.

39)
Draw a graph showing the effect of an increase in the saving rate on the
production function.

40)
Why does depreciation decrease the stock of capital?

41)
Will increased imports of supercomputers for industry promote economic growth?

42)
Explain the effect of trade deficits on economic growth.

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