Refer to Figure 8.1. If each player cooperated with one another rather than playing their dominant strategies, the economic pie would grow by
A) $0.
B) $280.
C) $490.
D) $560.
D
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Historical evidence shows that the relationship between interest rates and investment is
A) indeterminable. B) positive. C) negative. D) None of the above.
Melon Computer Company manufacturers its computer components in Singapore and assembles the computers intended for sale in North America in its plant in Arizona. If the U.S
reduces the corporate income tax rate next year, what is the likely outcome for Melon Computer Company? A) Reduce the transfer price for computer components and increase downstream profits B) Reduce the transfer price for computer components and decrease downstream profits C) Increase the transfer price for computer components and increase downstream profits D) Increase the transfer price for computer components and decrease downstream profits
Crowding out refers to the situation in which:
a. borrowing by the federal government raises interest rates and causes firms to invest less. b. foreigners sell their bonds and purchase U.S. goods and services. c. borrowing by the federal government causes state and local governments to lower their taxes. d. increased federal taxes to balance the budget causes interest rates to increase and consumer credit decreases.
The money multiplier will be
a. larger if banks hold on to excess reserves but smaller if private citizens hold on to cash. b. smaller if banks hold on to excess reserves but larger if private citizens hold on to cash. c. smaller if either banks hold on to excess reserves or private citizens hold on to cash. d. larger if either banks hold on to excess reserves or private citizens hold on to cash. e. constant whether or not banks and citizens try to alter their holdings of excess reserves and cash.