Question

QUESTION 9 In a closed economy, private saving is equal to which of the following? ( Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers) A. Y - C - T B. Y - G - T C. Y - G - T + TR D. Y + TR - C - T 4 points

QUESTION 10 Article Summary According to the Office for National Statistics in the United Kingdom, productivity in the UK in 2012 was well below the average of the G7 countries, only faring better than Japan. The G7 is a group of the seven most industrialized countries, and includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. Compared to the G7 average, the UK was 16% less productive per hour worked, and output was 19% worse when measured on a per worker basis. The productivity gap was the largest for the UK since 1994. Worker productivity has increased in all of the G7 nations except for the UK since 2007, where it has fallen by two percentage points. The most productive workers were in the United States, where workers were 29 percentage points more productive per hour worked than in the UK. Source: "UK workers much less productive than others in the G7," Guardian, September 18, 2013. Refer to the Article Summary. Unlike in the UK, labor productivity in the other G7 nations has increased since 2007. An increase in labor productivity A. will increase the labor force participation rate. B. allows the average consumer to increase consumption. C. will create short-run, but not long-run, economic growth. D. will increase output and decrease wages in the long run. 4 points

Answer 1

9. In a closed economy, private savings is equal to income (Y) minus consumption (C) minus taxes (T)

or, S = Y-C-T.

Here, only option A is correct as all other options do not refer to the correct definition for private savings in a closed economy.

10. An increase in labor productivity does not mean increase in labor force participation rate. Thus, option a is incorrect.

However, an increase in labor productivity allows the average consumer to increase consumption at affordable price. Thus, option b is correct.

Again, increase in labor productivity causes long-run economic growth. Hence, option c is incorrect.

Similarly, increase in labor productivity increases output and wages in the long-run. Thus, option d is also incorrect.

Here, option b is the correct answer.