It can be shown that the Nash equilibrium would indicate that without any agreements, the best outcome for each large nation would be to:
a. not impose a tariff.
b. impose a tariff.
c. find other ways to reward their domestic firms.
d. impose a consumption tax.
Ans: b. impose a tariff.
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There exists diminishing _______________ for gambles
Fill in the blank(s) with the appropriate word(s).
The theory of economic growth focuses on the
A. growth of real income equality in the long run; not on the growth of real income in the short run. B. growth of resources in the long run, not on the efficiency of resource use in the short run. C. growth of potential output over the long run, not on fluctuations in the level of economic activity in the short run. D. advancements in technology over the long run, not on short-run increases in real GDP.
All of the following are true about foreign direct investment (FDI) and portfolio investment EXCEPT
A) increases in the flow of portfolio investments increase the likelihood of financial crisis. B) both portfolio investments and FDI are the same in that they both give their holders a claim on the future output of the foreign economy. C) FDI is relatively illiquid compared to portfolio investment. D) portfolio investments have been on the decline in recent years (or decades). E) FDI investors must be willing to go through many ups and downs in order to benefit from their long-term investments.
The shape of a firm's long-run average cost curve is determined by
a. the degree to which each input encounters diminishing marginal productivity. b. the underlying nature of the firm's production function when all inputs are able to be varied. c. how much the firm decides to produce. d. the way in which the firm's expansion path reacts to changes in the rental rate on capital.