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What are three problems with trade restrictions? What are three reasons often given for trade restrictions?
How might a nation's endowment of natural resources, labor, and climate shape the nature of its comparative advantage?
Why might foreign producers voluntarily agree to a quota rather than face an imposed tariff?
What are the two trade restriction policies we discussed in this chapter? Who benefits and who loses from each of these policies?
What market adjustments will ensue in this case, assuming no shipping costs or trade barriers?
Why are current account balances generally mirror images of capital account balances? What are three factors that might make a capital account surplus grow?
Suppose the people in the United States increase their savings rate. How will this affect the rate of economic growth in the United States?
Define human capital. Draw a graph that illustrates an increase in effective labor on a production function.
Draw an aggregate production function with a typical shape; label this function F.
How can an increase in educational opportunities increase growth? Use a graph to illustrate how educational opportunities affect a nation's production function.
The basic Solow growth model implies convergence. What is convergence? What key assumption about the marginal product of capital implies convergence?
If we rule out these two sources of growth, to what can we attribute the economic growth in China since 1979?
What does this mean? Why does this matter for growth policy? What does this assumption imply about growth rates across nations over time?
hat are the two key properties of the aggregate production function at the center of Solow's first contribution?
A stock market mutual fund earning 8% interest per year. How long would it take to double your savings in each of the three accounts?
Chinese per capita real GDP doubled again in only seven years, reaching $1,400 by 1986. What was the average annual economic growth rate between 1979 and 1986?
What do economists mean by the term institutions? Name five different laws that are institutions that affect production incentives.
Discuss the president's quote in terms of both short-run unemployment and long-run growth.
What are three reasons the aggregate demand curve slopes downward? Name at least three factors that cause the aggregate demand curve to shift.
What are three reasons the short-run aggregate supply curve slopes upward? Name at least three factors that cause the short-run aggregate supply curve to shift.
How are the factors that shift the long-run aggregate supply curve different from those that shift the short-run aggregate supply curve?
Why is the long-run aggregate supply curve vertical? How does strong economic growth in China affect aggregate demand in the United States?
If no policy action is taken, what will happen to the price level, output, and employment in the long run?
n the first economy, all workers have long term contracts that guarantee. Which economy will return to the natural rate of output first? Explain your response.
How does a lower price level in the United States affect the purchases of imported goods? Explain, using aggregate demand.