How might the globalization of financial markets affect the role of financial frictions in business fluctuations?
What will be an ideal response?
Globalization entails a global business cycle in which an increasing number of economies are swept along in fluctuations associated with the strategies and mechanisms of financial intermediation. When a nation's economy faces an economic disruption, whether or not associated with financial frictions, that is clearly localized (e.g., a business or political scandal) and does not call into question global financial instruments and markets, the effect of global integration is likely to be positive, supporting resource reallocation to move the affected economy beyond the crisis.
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A common incentive owners offer managers is
A) the year-end bonus. B) stock options. C) profit sharing. D) All of the above.
The government can help solve the information asymmetry problem by:
A. making it illegal to complete a transaction without complete information. B. providing the missing information to the less-informed party. C. requiring the more informed party to not use the imbalance to their advantage. D. All of these statements are true.
Which of the following is correct?
a. Any event that changes the supply or demand for labor must change the value of the marginal product. b. A profit-maximizing firm hires workers so long as the wage rate exceeds the value of the marginal product of labor. c. An increase in the supply of labor increases both employment and wages. d. A decrease in the demand for labor decreases wages but increases employment.
The economy is in equilibrium, TP = TE, and Real GDP is $500 billion. The MPC is 0.95, the multiplier is operative, and idle resources exist at each expenditure round. Autonomous investment spending rises by $4 billion. As a result, the TE curve shifts __________, inventory levels unexpectedly __________, business firms __________ the quantity of goods and services they produce, and Real GDP
__________ by __________. A) upward; fall; increase; rises; $3.8 billion B) upward; fall; increase; rises; $8 billion C) downward; rise; decrease; falls; $80 billion D) upward; fall; increase; rises; $80 billion E) downward; fall; decrease; falls; $3.8 billion