Answer the following statements true (T) or false (F)
1. The study of economics is primarily theoretical and has very little practical application.
2. Economics is considered a physical science.
3. Economies must make choices because resources are limited while wants are unlimited.
4. Production is the creation or addition of utility.
1. FALSE
2. FALSE
3. TRUE
4. TRUE
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The purchase of less than 10 percent of the shares of ownership in a company in another country is known as
A) portfolio investment. B) an ineffective method for encouraging economic growth. C) foreign direct investment. D) a hostile takeover.
If a very small country trades with a very large country according to the Ricardian model, then
A) the small country will suffer a decrease in economic welfare. B) the large country will suffer a decrease in economic welfare. C) the small country only will enjoy gains from trade. D) the large country will enjoy gains from trade. E) both countries will enjoy equal gains from trade.
Forecasting the future path of real GDP by exploiting past statistical relationships
A) is never very reliable. B) can be accomplished by the construction and use of an index of leading variables. C) can be accomplished by the construction and use of an index of lagging variables. D) can be accomplished by the construction and use of an index of coincident variables.
A production possibilities frontier shifts outward when
a. the economy experiences economic growth. b. the desires of the economy's citizens change. c. at least one of the basic principles of economics is violated. d. opportunity costs are lessened.