A) labor market rigidities.
B) tight monetary policy.
C) tight fiscal policy.
D) financial crisis.
Answer: A
Diff: 2
6) Discuss the types of policies that could be implemented to reduce European unemployment.
Answer: There are basically two sets of policies. First, policy makers could reduce labor market rigidities that some economists believe have contributed to the high unemployment. Some examples of labor market rigidities are high unemployment benefits, high minimum wages, and excessive job protection regulations. The second set of policies includes bad labor relations and inadequate macroeconomic policies.
Diff: 2
7) Discuss what is meant by labor market rigidities and explain how they might cause the relatively high unemployment in Europe.
Answer: Examples of labor market rigidities are: relatively high minimum wage, relatively high unemployment benefits, and relatively high level of worker protection. All three of these are hypothesized to cause a reduction in employment and, therefore, an increase in the unemployment rate.
Diff: 2
8) Discuss some of the potential benefits and costs of the adoption of the Euro.
Answer: One of the benefits of the Euro is largely symbolic. Countries that have in the past century been in wars against each other are now using the same currency. There are economic benefits as well. The use of the same currency will eliminate the need to convert currencies when, for example, buying foreign goods from a country that has also adopted the Euro. One of the possible costs of the Euro is that it will force countries to pursue the same monetary policy. No longer will policy makers in these countries pursue independent monetary policy.
Diff: 2
1.4 China
1) In 2018, output per capita in China was approximately equal to
A) $2,100.
B) $9,700.
C) $22,100.
D) $32,100.
Answer: B
Diff: 2
2) Between 2010 and 2017 the annual rate of output growth in China was approximately equal to
A) 2%.
B) 5%.
C) 8%.
D) 20%.
Answer: C
Diff: 2
3) Which of the following explains the relatively high growth rate of output in China since 1980?
A) accumulation of capital
B) technological progress
C) a transition from central planning to a market economy
D) all of these
Answer: C
Diff: 2
4) What are the two primary sources of economic growth in China since 1980?
Answer: The relatively high output growth in China has occurred as a result of capital accumulation and technological progress.
Diff: 1
5) In addition to capital accumulation and technological progress, what are some of the other possible explanations for recent output growth in China?
Answer: There are several additional potential causes of economic growth in China. These are: (1) the transition from central planning to a market economy; (2) the encouragement of joint ventures with foreign firms; and (3) protection of property rights.
Diff: 2
1.5 Looking Ahead
1) Which of the following countries has a population of 1,330 million?
A) India
B) Japan
C) China
D) Brazil
Answer: A
Diff: 1