The marginal product of capital is the change in output produced that results in one unit increase (change) in the capital stock.

M x V = P x Y

500 x 4 = P x 2000

P = 1

Velocity of money is the number that represents, on average, how many times one unit of money is used for purchasing final goods and services.

Regulating public expenditures, taxes and  disposable income is not among the functions of Central Bank.

The main aim of the economic policies is to attain the internal equilibrium and external equilibrium at the same time. The concurrent equilibrium of the internal and external equilibrium is called general equilibrium of an economy.

There are different approaches among economists regarding the shape of the short-run aggregate supply curve, in other words, the slope of the short-run aggregate supply curve. Classical economists argue that the short-run supply curve is completely vertical or rather steep because the economy is always at full of employment as a result of dynamics of the market mechanism.

The negative difference between the actual GDP and the potential GDP in an economy is the negative GDP gap or deflationary gap, which is the loss of production due to underemployment in that country. In such a situation where production factors do not participate into production, there is a possibility of increasing employment and income by increasing aggregate expenditures in the economy.

If economy recovers more than required and there are signs of inflationary threats, monetary authorities would decide to slowdown the money supply and to increase interest rates.

Aggregate demand curve is the curve that shows the relationship between general price level and production level.

With  47607.6715 US $, Japan had a higher GDP per capita in 2016, followed by Germany, France, U.K. and Spain.

The growth accounting shows that the main sources of economic growth are the productivity growth, capital input growth, and labor input growth.

The Harrod–Domar model is a simple model that relates an economy’s growth rate to its capital stock and it emphasizes how positive changes in investment spending causes an increase in an economy’s productive capacity. The Harrod-Domar growth rate equation states that the growth rate g of GDP is jointly determined by the savings ratio (s), the capital–output ratio (v) and the depreciation rate of capital stock. The implication and suggestion of this model about the long-run economic growth and development is simply to increase resources devoted to investment.

Medium HDI - Medium (0.55-0.69) Selected countries include: Moldova, Botswana, Egypt, Indonesia, Paraguay, South Africa, Vietnam, Bolivia, Kyrgyzstan, Iraq, Morocco, Namibia, India, Ghana, Kenya, Pakistan.

The effects in III and IV are related to contractionary economic policies.

Correct answer is A.

A country’s capital stock (Kt) at a point in time consists of plants, machinery, equipment and infrastructure.

Liquidity is the speed and easiness of an asset to convert currency or demand deposit or any other payment tool.

The best way to understand how a bank operates is to review the balance sheet of a bank. In a bank’s balance sheet consists cash, securities, loans, other assets in the asset part. In the bank’s labilities part, the items are demand deposits, time deposits, other liabilities and net capital.

If interest rate reduces below the equilibrium level, there will be excess demand for money. Excessive demand means that economic units wish to hold an amount of money more than the money supply of central bank. As long as money supply does not change, excess money demand will cause a pressure on interest rate to rise. In an environment where money supply does not change, economic units will try to have the additional amount of money they need by converting some of their financial assets to cash. One of these assets is bills they hold. When economic units start selling bills, the price of these asset decreases and therefore their interest rate increases.

Today, World Trade Organization (WTO) is responsible for the global trade rules. Although it has many agreements to regulate the global trade, the main agreement is still the GATT (General Agreement on Tariffs and Trade) which consists of rules on commodity trade.