Chapter 13 Why Do Economies Grow?

| November 9, 2018

23)
Which of the following uses of tax revenues collected by the government leads
to increased capital deepening in the United States?
A)
providing food to a nation suffering from a famine
B)
foreign aid given to Mexico to build new schools
C)
higher salaries for members of Congress
D)
subsidizing airport construction in Seattle

24)
If the government ________ taxes to pay for spending on infrastructure, the
result will most likely be a(n) ________ in capital deepening.
A)
increases; increase
B)
decreases; increase
C)
increases; decrease
D)
eliminates; elimination

25)
Suppose consumers save 3% of their incomes. If the government collects 1 dollar
in taxes from each taxpayer, private saving will ________ per taxpayer.
A)
decrease by 3 cents
B)
decrease by 97 cents
C)
increase by $1
D)
increase by 97 cents

26)
Suppose consumers save 5% of their incomes. If the government collects 100
dollars in taxes from each taxpayer, private saving will ________ per taxpayer.
A)
increase by $105
B)
decrease by $95
C)
decrease by $5
D)
decrease by 95 cents

27)
Suppose consumers save 17% of their incomes. If the government collects 10
dollar in taxes from each taxpayer and invested it in infrastructure, total
social investment will ________ per taxpayer.
A)
increase by $10.17
B)
increase by $8.30
C)
decrease by $1.70
D)
decrease by $8.30

28)
Suppose consumers save 8% of their incomes. If the government collects 4 dollar
in taxes from each taxpayer and invested it in infrastructure, total social
investment will ________ per taxpayer.
A)
increase by $ 4.32
B)
increase by $3.68
C)
increase by 32 cents
D)
decrease by 64 cents.

29)
Nations that borrow from abroad to support current investment will
A)
always be better off in the future.
B)
always sacrifice future consumption.
C)
be better off in the future if the investments are profitable.
D)
sacrifice future consumption only if the investments are profitable.

30)
Nations that borrow from abroad to support current consumption
A)
will always be better off in the future.
B)
will always sacrifice future consumption.
C)
may sacrifice future consumption.
D)
will always sacrifice current consumption.

31)
Trade deficits always lead to future decreases in consumption if the trade
deficits
A)
support current investment.
B)
support current consumption.
C)
support either current investment or current consumption.
D)
require borrowing from abroad.

32)
An economy is better off with an increase in the stock of capital.

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