Question

Sohrab has a job and usually makes enough money to pay rent, but if the economy goes bad, he struggles to pay rent and buy food. Which statement best describes his situation?

He is not poor

He is absolutely poor

He is relatively poor

He is vulnerable to poverty

Which one is Not a potential explanation for business fluctuations?

Seasonal unemployment

A change in spending

A change in Production

Saving and Investment inequality

which one is the biggest component of spending?

Government expenditure

Net export

Consumption

Investment

Which factor increases consumption spending?

a rise in disposable income

a rise in the interest rate

a fall in wealth

Households pessimism about future

If aggregate expenditure function is AE = 1 + 0.7GDP, when GDP (income) increases by 3 dollars, how much spending will increase? (Numbers are in billions)

2.1

1

3

3.1

Regarding to the topic discussed in the article, what is one limitation with typical cross-country studies on the connection between democracy and economic growth ?

Their results are not conclusive

None

They capture correlations rather than causal effect.

They capture causal effect rather than correlation

Answer 1

1)Sohrab has a job and usually makes enough money to pay rent, but if the economy goes bad, he struggles to pay rent and buy food. Which statement best describes his situation?

Ans.He is vulnerable to poverty

Means, if a person is at risk of becoming poor, temporary or permanent, due to certain factors like, ckimate change or economy change, etc, is called  vulnerable to poverty.

2)Which one is Not a potential explanation for business fluctuations?

Ans. Saving and Investment inequality

It is a determinant of income inequality. Business fluctuates between periods of expansion and contraction. These changes are caused by levels of employment, productivity, and the total demand for and supply of the nation's goods and services, which is the other three points.

3)which one is the biggest component of spending?

Ans.Consumption.Consumer spending is the largest component, that is , consumption, of Gross Domestic Product (GDP).

4)Which factor increases consumption spending?

Ans.a rise in disposable income

When there a rise in disposable income, households have more money to either save or spend, which naturally leads to a growth in consumption spending.