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Message
Here's an economics multiple choice question for you all
Posted on 5/15/14 at 4:14 pm
Posted on 5/15/14 at 4:14 pm
So I'm taking the Social Studies Praxis next month and I decided to do the practice test for it today. There are 15 economics questions. Here's one of them.
An increase in which of the following is most likely to increase economic growth?
A. Productivity
B. Personal taxes
C. Consumer spending
D. Interest rates
And just for the hell of it, you can answer HERE as well.
ETA: The answer is A.
An increase in which of the following is most likely to increase economic growth?
A. Productivity
B. Personal taxes
C. Consumer spending
D. Interest rates
And just for the hell of it, you can answer HERE as well.
ETA: The answer is A.
This post was edited on 5/15/14 at 7:44 pm
8
Posted on 5/15/14 at 4:20 pm to 318TigerFan
C
Posted on 5/15/14 at 4:21 pm to TigerSaints318
C
Posted on 5/15/14 at 4:24 pm to bayoubengals88
A
Posted on 5/15/14 at 4:26 pm to bayoubengals88
A
Posted on 5/15/14 at 4:27 pm to bayoubengals88
I would go with C but you can make a case that if they are basing "economic growth" solely on GDP, you could say A
Posted on 5/15/14 at 4:42 pm to Broke
A is wrong because an increase in productivity is most likely due to an increase in the capital to labor ratio, which is likely due to a decrease in the labor function, which would lead to decreased GDP output.
Increase in consumer spending increases GDP, per the widely accepted formula of
C + I + G + NX = Y (GDP)
Increase in consumer spending increases GDP, per the widely accepted formula of
C + I + G + NX = Y (GDP)
Posted on 5/15/14 at 4:55 pm to bayoubengals88
A.
C is wrong because an increase in consumer spending, all else equal, means a lower savings rate. Lower savings rate ---> less growth
C is wrong because an increase in consumer spending, all else equal, means a lower savings rate. Lower savings rate ---> less growth
Posted on 5/15/14 at 4:55 pm to TheHiddenFlask
I just said you could make a case for it. I'm C all the way mayne.
Posted on 5/15/14 at 4:55 pm to The Sultan of Swine
quote:
Lower savings rate ---> less growth
Wait wut?
Posted on 5/15/14 at 4:56 pm to The Sultan of Swine
quote:
C is wrong because an increase in consumer spending, all else equal, means a lower savings rate. Lower savings rate ---> less growth
In the long run, we're all dead, son.
:rimshot:
Posted on 5/15/14 at 4:58 pm to TheHiddenFlask
quote:
Increase in consumer spending increases GDP, per the widely accepted formula of
C + I + G + NX = Y (GDP)
"Growth" in economics usually refers to the year over year increase/decrease in GDP.
The formula you're using is a point-in-time measurement, not a growth measurement.
In other words, increasing GDP this period does not mean you have increased your growth rate.
Posted on 5/15/14 at 4:58 pm to TheHiddenFlask
quote:
In the long run, we're all dead, son.
The US savings rate is just embarrassing.
Posted on 5/15/14 at 5:00 pm to Broke
quote:
Wait wut?
I think you are confusing spending/level and growth.
Less savings will increase current spending, but it lowers your investment in capital, which leads to a lower long run growth rate.
Posted on 5/15/14 at 5:03 pm to TheHiddenFlask
quote:
In the long run, we're all dead, son.
Well played
Posted on 5/15/14 at 5:16 pm to Broke
quote:
The US savings rate is just embarrassing.
its not as bad as they say.
a) businesses save quite well, and corporate coffers are flush, that is essentially savings that may not be accurately represented in the high level metrics.
b) Lower class people save so little, it brings down the overall average.
c) traditional savings vehicle (the CD, money market) have had piss poor rates for 20+ years. This disincentives savings. This is the express purpose of lose monetary policies to make it more attractive to spend.
Its not good, but I don't think it will cause as many problems as our surging deficit.
Posted on 5/15/14 at 5:34 pm to bayoubengals88
Patiently waiting for the supposed correct answer. If they say it's B I'll break stuff.
Posted on 5/15/14 at 5:37 pm to bayoubengals88
I went with C. I'm not entirely sure but that's what my gut said.
Posted on 5/15/14 at 5:57 pm to bayoubengals88
C
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