21.One of the implications of the basic growth model developed in class is that

a.the only way to grow incomes is by adopting new technology.

b.growth rates for poor countries will be higher than those in rich countries (all else held constant).

c.while poor countries can grow, its not possible for them to catch up with rich countries since they start too far behind.

d.countries with more capital will have higher per capita incomes.

22.Which of the following policies would solve the issue of bracket creep (fiscal drag) (i) having one tax rate for all income rather than a progressive system. (ii) indexing tax rates in a progressive regime to inflation. (iii) maintaining an inflation rate of zero percent.

a.(i) and (iii) but not (ii)

b.(i) and (ii) but not (iii)

c.(ii) and (iii) but not (i)

d.(i) and (ii) and (iii)

23.Which of the following is correct?

a.Real variables and nominal variables are unrelated in the long run.

b.In the long run money only affects nominal rather than real variables.

c.Money has no impact on real variables.

d.Nominal wages never fall but real wages can.

24.Which of the following policies would be most appropriate in reducing frictional unemployment?

a.Work search services for workers looking for jobs.

b.Increased government spending to create jobs.

c.Elimination of minimum wages for workers under 18.

d.Subsidies for re-training programmes for workers whose skills are no longer relevant.

25.Which of the following will shift both SAS and LAS?

a.A fall in the real exchange rate.

b.A rise in productivity.

c.An increase in raw material costs.

d.A rise in nominal wages.