Which of the following forces is NOT mentioned in the textbook as a force that sometimes discourages innovative activities?
A. Workers who fear losing their jobs
B. Companies that compete with innovative companies
C. Executives concerned about low rates of return
D. Ordinary people who don't like change
Answer: C
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Suppose the government wants to maintain a balanced budget. To achieve this goal, when the economy falls into recession government would need to ________ taxes, which would cause aggregate demand to ________
A) increase; decrease B) decrease; increase C) decrease; decrease D) increase; increase
In Fisher's model of the determination of the rate of return, the price of a "future good" is:
a. less than the price of a current good if the interest rate is negative. b. equal to the price of a current good if the interest rate is positive. c. greater than the price of a current good if the interest rate is positive. d. less than the price of a current good if the interest rate is positive.
In perfect competition, environmental externalities need not distort the allocation of resources providing
a. transactions costs are zero. b. average costs are constant for all output levels. c. firms install pollution control equipment. d. the government sets realistic pollution standards.
The practice of buying a foreign currency with one currency then reselling it to buy yet another currency
a. creates disequilibrium in the foreign exchange market b. is illegal in the U.S. c. is arbitrage d. is impossible because the foreign exchange market creates general equilibrium among exchange rates e. leads to mutually inconsistent exchange rates