Author Question: Currently, China and India are growing much faster than the United States and Western Europe. This ... (Read 55 times)

bobthebuilder · **on:** Jun 30, 2018

Currently, China and India are growing much faster than the United States and Western Europe. This high rate of growth will eventually and naturally slow down in the future because:
a. China and India will exhaust their natural resources.
b. Actually, there is no economic reason for China and India's growth rates to fall in the future.
c. Current account surpluses will eventually cause capital flight from these nations which will lower the value of their currency and reduce their growth rates.
d. Consumption will increase and crowd out investment spending.
e. Diminishing returns will eventually set in.

Question 2

When the supply of real loanable funds is upward-sloping and the demand for real loanable funds is downward-sloping, an increase in the budget deficit causes aggregate demand to:
a. Rise by more than the deficit.
b. Rise by less than the deficit.
c. Rise by an amount more or less than the deficit, depending on the elasticity of supply and demand.
d. Fall by an amount less than the deficit.
e. Rise by an amount equal to the deficit.