The Diagram Below Shows Alternate Paths for Two Hypothetical Economies,each

question 99

Multiple Choice

The diagram below shows alternate paths for two hypothetical economies,each starting with GDP of $1 billion.Assume that Area 1 is equal to Area 2. FIGURE 25-1 Refer to Figure 25-1.Suppose Economy A jumps to the path of Economy B at Year 0 by increasing the share of GDP that is saved.In that case,which of the following statements about Economy A is true?

• A)Economy A will not be able to regain the losses in consumption it incurs by jumping to the path of Economy B.
• B)By Year Y,the increase in consumption made possible by the economy's higher growth rate approximately equals the consumption sacrificed in earlier years.
• C)By Year X,Economy A is better off in terms of material living standards for having jumped to the path of Economy B.
• D)By jumping to a new growth path at Year 0,Economy A has increased the share of national income that is consumed.
• E)By Year X,Economy A is saving and investing the same share of its national income as it would have been had it stayed on its original path.

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Definitions:

Acceptance

In contract law, it is the act of agreeing to the terms of an offer, thus creating a binding contract.

Commercial Reasonableness

A legal standard that measures the fairness of business practices, actions, or decisions in a commercial context.

Subjective Standard

A benchmark for judgment based on personal opinions, feelings, or tastes, rather than external facts.

Good Faith

An intention to act with honesty, fairness, and integrity in dealings, without seeking to deceive or defraud.