Explain why a merchandise trade deficit created by imports of consumer goods is more troublesome than a merchandise trade deficit created by imports of capital goods
A merchandise trade deficit created by imports of consumer goods is unlikely to spur economic growth,
while a merchandise trade deficit created by imports of capital goods may stimulate economic growth that
will lead to an expansion of exports in the future, making it easier to offset the merchandise trade deficit
with a future trade surplus.
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Why does a prisoner's dilemma lead to a noncooperative equilibrium?
A) because players must choose from a limited number of non-dominant strategies B) because each player is uncertain how other players will play the game C) because each player had agreed before the game started to minimize the harm that he can inflict on the other players D) because each rational player has a dominant strategy to play a certain way regardless of what other players do
Italy has a comparative advantage in the production of
A. beer.
B. pizza.
C. both beer and pizza.
D. neither beer nor pizza.
From the "economic perspective," people make purposeful decisions based on hypotheses.
Answer the following statement true (T) or false (F)
If a bank needs to raise the amount of capital relative to assets, a bank manager might choose to
A) buy back bank stock. B) pay higher dividends. C) shrink the size of the bank. D) sell securities the bank owns and put the funds into the reserve account.