Economic growth completely depends on people consuming their income .pdf

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economic ercise Scores 0 of 1 pt Assignment Score: 4.84% (3 of 62 pts) Suppose that the price of a pair of shoes is $10 and the price of a box of tea is $6. What is the relative price of a pair of shoes? OA 1667 OB 4.000 Oc 16.000 OD 0.600 Solution 1. Relative price is the ratio of prices of the two goods, Here, relative price of a pair of shoes = 10/6 = 1.6667 option a. 2. The relativ price of hospital room in 2003 = 250/350 = 0.71 Relative price of hotel suite in 2003 =350/250 = 1.4 Similarly in 2004, for hospital rooms= 0.733 for hotel suite = 1.36 Hence, in 2004, the relative price for hospital room increased and for hotel suite it decreased . option b 3. option c . relative price of hamburger increased from 0.83 to 0.89 4.Picture not cleaar. However, market quantity demanded is the sum of all quanttites at the given price. 5. option c )9. It is the sum of all quantities demanded.

Education

Economic growth completely depends on people consuming their income rather than saving and
investing.
True
False
Which of the following is not part of National Income?
A.Employee compensation.
B.Interest.
C.Rent.
D.All are components of National Income
Because patents provide strong incentives to develop new technologies, they tend to help to
increase economic growth.
True
False
Increasing returns to scale exist when doubling all inputs less than doubles output.
True
False
Solution
1. FALSE
Economic growth refers to increase in National Output and per capita income.Two of most
common growth models- Solow model and Harrod Domar Growth model expound that
economic growth assumes savings = investment condition i.e. all the savings in the economy is
invested. This generates aggregate demand in the economy and hence triggering the process of
growth.
2. D.All are components of National Income
The income approach to estimating national income adds returns to different factors of
production i.e. employee compensation, rental income and interest.
3. TRUE
Adding strong incentives to R&D results in building innovative technologies which tend to
improve productivity in the economy and hence encourage economic growth.
4. FALSE
Increasing returns to scale implies that when factors of production are doubled then the
production doubles by more than two times.

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