Category: Economics

➤ Why is per capita income considered a key factor between two countries?
Per capita income reflects purchasing power, factor endowments, and technology adoption. These features influence comparative advantage and which goods a country exports or imports. Income gaps also shape political attitudes toward trade liberalization and the design of trade agreements. As a result, per capita income explains many economic differences that determine bilateral trade relationships.

➤ How can I test for reverse causality?
Check temporal ordering and estimate models with lagged regressors to see whether past X predicts future Y. Use Granger-causality tests for time series and lead-lag checks in panel data. Stronger identification comes from instruments, natural experiments, or randomized variation that isolate exogenous changes in X and reveal the causal direction.

Question 21
Consider the market for the normal good hotdogs. Suppose the price ofhotdogs increase. Awill exist in the market for hotdogs.surplusnone of theseshortagecrisis

➤ What is cyclical unemployment?
Cyclical unemployment is joblessness caused by downturns in the business cycle. It rises when aggregate demand and output fall during recessions and falls during expansions. Firms reduce hiring and lay off workers when sales drop. It differs from structural or frictional unemployment because it depends on overall economic activity.

Question 3A nation’s exports minus its imports:a. equals its private investment.b. is always a positive number.c. is equal to net transfer payments.d. is net exports.

If a company is using a ________Blank, then more efficient workers earn higher wages.
Multiple Choice
monthly salary
differential rate systems
sliding wage scale
quota
stimulus