Describe the political power cost of large capital flows into low-income countries
What will be an ideal response?
The Odious Debt situation pointed out that among the lowest income countries, corruption and lack of freedom have been a problem in the debt crisis. Similar problems could result from non-debt capital inflows (although tax payers may not be left with the same kinds of IOUs with interest). Large inflows of capital give access to power that may be exploited on the side of those doing the investing (their gain as opposed to the host nation's) or by those with political power in the nation receiving it (the interests of the people in power as opposed to the nation's interests). Large bribes for favorable legal treatment, for example, may be in the interests of the policy makers and the firms, but not the people.
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To offset the effect of households and firms deciding to hold less of their money in checking account deposits and more in currency, the Federal Reserve could
A) raise the required reserve ratio. B) buy Treasury securities. C) raise the discount rate. D) lower bank taxes.
Firms in which type of market make zero economic profit in the long run?
A) perfect competition and monopolistic competition B) monopoly C) perfect competition D) monopolistic competition
Which of the following is a widely used measure of the standard of living?
(a) Nominal output per person employed; (b) Nominal output per head of population; (c) Real income per head of population; (d) Real output per unit of capital.
Use the figure below to answer the following question.
If a price ceiling in this market is set at P1, then consumer surplus equals area
A. a + b + d. B. b. C. a. D. a + b.