Why must caution be employed in comparing stock indexes across countries?
What will be an ideal response?
Since stock indexes are made up of different companies and can be composed in different ways, comparing indexes in terms of their levels is really useless, much as it really is of little value to just look at the level of various indexes. What can be important and interesting is to compare percentage changes in the various indexes and to see how they correlate or move together.
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Economists have focused more attention on the formation of expectations in recent years. This increase in interest can probably best be explained by the recognition that
A) expectations influence the behavior of participants in the economy and thus have a major impact on economic activity. B) expectations influence only a few individuals, have little impact on the overall economy, but can have important effects on a few markets. C) expectations influence many individuals, have little impact on the overall economy, but can have distributional effects. D) models that ignore expectations have little predictive power, even in the short run.
Entrepreneurial ability is defined as the ability to ______.
a. invent economic goods that will change society b. inspire others to reach their professional potential c. negotiate the lowest prices for scarce resources d. develop new products or production processes
The convergence hypothesis states that international differences in real GDP per capita tend to _____ over time.
A. diverge B. fluctuate C. remain constant D. narrow
Suppose total benefits and total costs are given by B(Y) = 600Y ? 12Y2 and C(Y) = 20Y2. What level of Y will yield the maximum net benefits?
A. 600/64 B. 600/32 C. 300/8 D. 300/64