Recent decades have seen a trend toward globalization, which means that buying and selling in markets have crossed national borders to an increasing extent. As a result, firms and workers from different countries are increasingly interconnected. Globalization has occurred for a number of reasons. List three reasons and briefly describe their effect contributing toward globalization.

What will be an ideal response?


Improvements in shipping and air cargo have driven down transportation costs. Innovations in computing and telecommunications have made it easier and cheaper to manage long-distance economic connections of production and sales. Many valuable products and services in the modern economy can take the form of information. These products and many others can be transported over telephones and computer networks at ever-lower costs. Finally, international agreements and treaties between countries have encouraged greater trade.

Economics

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One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of

a. factor markets. b. energy markets. c. welfare economics. d. labor economics.

Economics

In the dollar-euro foreign exchange market, if many financial investors become worried about the stability of the euro and thus invest in U.S. financial assets instead of in European assets, then the:

A. Supply of euros will decrease and the euro will appreciate B. Supply of euros will increase and the euro will depreciate C. Demand for euros will increase and the euro will appreciate D. Demand for U.S. dollars will decrease and the dollar will depreciate

Economics

Suppose demand for a good is QD = 100 - P and supply is QS = -20 + P. What is the equilibrium quantity?

a. 20 b. 40 c. 60 d. 80

Economics

Using the UIP equation, what would happen to the spot rate for euros if the dollar-euro exchange rate is expected to appreciate in the future?

a. The spot rate to purchase euros would rise (dollar depreciation). b. The spot rate to purchase euros would fall (dollar appreciation). c. The spot rate to purchase euros would remain unchanged. d. The spot rate to purchase euros would remain unchanged today, but rise in the future (dollar depreciation)

Economics