Deat expert please look carefully at the questions because I have asked them pre
ID: 1110933 • Letter: D
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Deat expert please look carefully at the questions because I have asked them previously and received different answers from different chegg experts and I do not have clear which one is the right answer anymore. Thank you
Determine whether following statements are true or false. Right answer is worth 0.5 points and wrong answer costs 0.5 points. The total points cannot be negative however. There is a single right answer to each item. 1. Central banks typically use changes of reserve requirements in their day-to-day control of the money supply. 2. Gross national product of Finland includes profits from a plant which is located in China but owned by a Finnish firm 3. A good is an inferior good if the substitution effect dominates the income effect. 4. In general equilibrium macro models fiscal policy has no effect on the economy 5. Unemployment rate means the ratio of unemployed people to working age population. 6. Current account is by definition equal to net exports 7. Production function F(K, N) = Kag 3 No 6 has constant returns to scale. 8. Production function F(K, N) = Koo 3 No , has constant returns to scale.Explanation / Answer
3. True
When goods are inferior then negative effect of substitution effect is greater than the positive effect of income effect.
4. False.
Change in fiscal policy i.e. change in government spending and taxation has effect on the economy.
5. False
Unemployment rate = Unemployed people / Labor force
6. False
Current account records trade in goods and services as well as transfer payments.
7. False
Let K and N are increased by m proportion.
F(mK, mN) = (mK)0.3(mN)0.6
= m0.3 + 0.6. F(K,N) = m0.9.F(K,N)
It implies output increased by less proportion. So, Decreasing returns to scale.
8. True.
Let K and N are increased by m proportion.
F(mK, mN) = (mK)0.3(mN)0.7
= m0.3 + 0.7. F(K,N) = m.F(K,N)
It implies output increased by same proportion. So, Constant returns to scale.
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