Differences in growth rates cannot explain why
A. some countries are wealthier than others.
B. income inequality exists.
C. the convergence hypothesis may hold.
D. the productivity growth rates in China and Japan are converging.
Answer: B
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Refer to Figure 4.4. The international capital market will be in equilibrium when the real interest rate in the United States is ________ and the real interest rate in the rest of the world is ________
A) 7%; 3% B) 5%; 7% C) 9%; 3% D) 5%; 5%
There are currently 1,000 firms in a competitive industry. Minimum long-run average cost is $80 and price $100. Explain what will happen to price, profit, and the number of firms in this industry over time.
What will be an ideal response?
Consider the following three bonds, Bond F, Bond J and Bond P. Bonds F and P mature in 1 year while Bond J matures in 2 years. Bond F and J have a face value of $10,000 while Bond P has a face value of $12,000 . If the interest rate is 15%, rank the three bonds from highest present value to lowest present value
a. Bond F, Bond P, Bond J b. Bond P, Bond F, Bond J c. Bond J, Bond F, Bond P d. Bond P, Bond J, Bond F e. Bond F, Bond J, Bond P
Predatory pricing occurs when
a. firms collude to set prices. Economists are certain this practice is profitable. b. firms collude to set prices. Economists are skeptical that this practice is profitable. c. A monopolist decreases its prices to maintain its monopoly. Economists are certain this practice is profitable. d. A monopolist decreases its prices to maintain its monopoly. Economists are skeptical that this practice is profitable.