Question

True/False

1. Retained earnings are usually sufficient to finance a firm’s rapid expansion in a high growth economy
2. Structural unemployment can be remedeid through training and education
3. If real GDP is higher in one year than the following year, then economic growth has occurred
4. The income approach of computing GDP sums up spending on comsumptions, investments, government purchases and net exports.
5. The exchange rate is the value of one currency in terms of another currency.
6. Inflation is an increase in purchasing power
7. The lengths of the recession and expansion phases and which sectors of the economy are most affected will rarely be the same in any two cycles
8. Technological change allows the economy to produce more output with the same amount of per capita and labor
9. Potential GDP is sometimes called full-employment GDP

Answer 1

1. False

Retained earnings are not sufficient to finance a firm’s rapid expansion in a high growth economy because usually retained earnings are not in such a huge amount.

2. True

The main cause of structural unemployment is mismatch of skills which can be cure by training and education.

3. True

As real GDP is a measure of growth, so if real GDP is higher in one year than the following year, then economic growth has occurred.

4. False

the expenditure approach of computing GDP sums up spending on consumption, investments, government purchases and net exports not income approach.

5. True

according to the definition of exchange rate, it is true.

6. False

Inflation is a decrease in purchasing power not increase.

7. True

8. True

9. true