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Answer as 'True' or 'False' 1
Answer as 'True' or 'False'
1. Technological change and labor productivity are positively related
2. There is a direct relationship between spendable income and consumer spending
3. Changes in the price level affect household wealth more than household income
4. In a capitalist market economy, the decision to save is made by the same people who make the major investment decisions
5. The United States was among the first of the modern industrial nations to establish a central banking system
Expert Solution
Answer 1. The statement is True.
Explanation: technological change and Labour productivity are directly related because progress in technology increases the labour productivity and degradation in technology reduces the labour productivity. When technology are updated labours are able to produce more efficiently and hence their productivity increases.
Answer 2. The statement is true.
Explanation: spendable income and consumer spending are directly related because as the income of consumer increases the purchasing power of consumer increases and hence consumer spend more more money on buying goods and services.
Answer 3. The statement is true.
Explanation: changes in price level declines the wealth of a household because increase in price level decrease the household consumption and hence the demand of goods and services fall. However household income is not as was as affected by price level. Savings rate also affect household income.
Answer 4. This statement is true.
Explanation: capitalist economy is governed by private Enterprises. Private businessmen are the people who invest and make decisions regarding the price and output.
Answer 5. This statement is true.
Explanation: Central Bank of United State was established in 1971 which was among the first Central Bank in the world.
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