39. Which of the following can cause technological progress? a. Research and dev

Question

39. Which of the following can cause technological progress? a. Research and development b.education c.free trade@all ofthe above e. none of the above. Units of Output 10 18 Price per Unit S2 40. Refer to the data in the table above. If year 1 is the base year, the price index for year 3 is: a. 120 b. 125 c. 133 d. 150. 41. Refer to the data in the table above. In year 4, nominal GDP would be a. $60 b. $90 c. $120 d. $316 42. Refer to the data in the table above. If year 2 is the base year, then Real GDP in year 5 is: a. $120 b. $90 c. $60 d. $30 43. Suppose you have the following information about the economy: (1) nominal interest rate equals 8 percent: (2) real interest rate equals 6 percent. The inflation rate is: a. 2 percent b. 6 percent c. 8 percent d. 14 percent

Explanation / Answer

39.

D. All of the above

R&D, investment in education as human capital development and sharing of technology as a part of free trade, promote technological progress.  

40.

200

Working note:

Price index in year 3 = ((8*4)/(8*2))*100 = 200

41.

B

Working note:

In year 4, nominal GDP = Price of year 4* output of year 4 = 6*18 = $90

42.

C

Working note:

In year 5, the real GDP = Price of year 2* output of year 5 = 3*20 = $60

43.

A.

Working note:

Inflation rate = Nominal interest rate – real interest rate = 8%-6% = 2%

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