Recall the Application about the attempt to form a salt cartel in the 19th century to answer the following question(s).Recall the Application. One reason cited for the failure of the salt cartel was:
A. the demand for salt sharply declined in the late 19th century.
B. new firms entering the market and underpricing the cartel.
C. foreign competition taking over the salt market.
D. the federal government's banning of price fixing in the salt market.
Answer: B
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Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy. As a result,
A) the economy will move down along the long-run aggregate supply curve. B) the economy will move up along the long-run aggregate supply curve. C) the long-run aggregate supply curve will shift to the right. D) the long-run aggregate supply curve will shift to the left.
The drawback to calculating real GDP using base-year prices is that
A) relative prices change over time and these are not reflected in base-year prices, and this distorts GDP. B) quality changes are reflected in base-year prices. C) relative prices change over time and these changes are reflected in base-year prices. D) real GDP in one year is not comparable to real GDP in another year.
The false paradigm model attributes lack of development to
a. inadequate attention to price incentives. b. inappropriate advice from rich country economists. c. low levels of savings and investment. d. a lack of government regulation.
An increase in the perceived riskiness of Company A stock ________ the risk premium investors require to purchase Company A stock and ________ the price of Company A stock.
A. decreases; decreases B. increases; decreases C. decreases; increases D. increases; increases