Which of the following is NOT consistent with the Permanent Income Hypothesis?
A. The theory would predict that people's consumption would be greater than their income until their mid to late 20s
B. A person who won the lottery would spend only a small part of their winnings in the first year
C. Consumption is smaller than income when people reach old age
D. People gear their consumption to their expected earnings more than to their current income
C. Consumption is smaller than income when people reach old age
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For a cartel to work, demand for the cartel's product must be
A. inelastic. B. unit elastic. C. perfectly elastic. D. elastic.
Refer to Negative Externality. Suppose there is no attempt to internalize the externality. Pigovian analysis indicates that the externality creates a deadweight loss equal to
The following questions refer to the accompanying diagram, which shows the effects of a negative externality created by an industry's production. The equilibrium quantity in the absence of any attempt to internalize the externality is QE, and the optimal quantity according to a Pigovian analysis is QO.
a. area C + D + E + G + H.
b. area D + E + H.
c. area C + D + G + H.
d. area E.
"New forms" of foreign investment do not include
a. management contracts b. joint ventures c. licensing d. investment insurance e. all of the above are new forms of foreign investment
Differences in interest rates for different type of loans are due to:
A. the amount of the loan. B. the length of time the borrower has to repay the loan. C. government policy. D. exchange rate