The ways in which the global financial and economic crisis of the 2000s resembles the crises in developing countries in the 1980s and 1990s include all of the following EXCEPT
A. Contagion made the crisis worse
B. Borrowers relied on short-term funding
C. Fixed exchange rates encouraged financial activity exposed to exchange-rate risk
D. Overlending and overborrowing played a key role
Answer: C
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The assumption that the marginal utility of wealth diminishes implies that
A) total utility falls when wealth increases. B) the marginal utility of wealth is negative. C) total utility increases with wealth and each additional unit of wealth increases total utility by a smaller amount. D) total utility increases with wealth and each additional unit of wealth increases total utility by the same amount.
A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where
A) GNP is much larger than GDP. B) GDP is much larger than GNP. C) GDP is not comparable to GDP. D) GDP is equal to GNP.
Profit is a guaranteed return to the entrepreneur
Indicate whether the statement is true or false
Unemployment payments
a. rise during a recession and thus reduce the severity of the recession b. rise during a recession and thus increase the severity of the recession c. rise during inflationary episodes and thus reduce the severity of the inflation d. fall during inflationary episodes and thus increase the severity of the inflation e. fall during a recession and thus increase the severity of the recession