If the actual capital stock exceeds the desired capital stock due to a cycle of overbuilding, then
A) net investment will fall dramatically.
B) net investment will increase dramatically.
C) net investment will not change.
D) the effect on net investment is unknown.
A
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Belize, a country in Central America, has a small coffee industry. Suppose Belize does not have free trade but it has comparative advantage in coffee production. If Belize allowed international trade, what would be the gains from trade?
A) Belize coffee producers would gain from trade. B) Belize coffee consumers would gain from trade. C) Belize would gain tariff revenue from trade. D) All of these answers are gains from trade.
Suppose a roll of paper towels costs $4 at Sam's Quick Stop, a local quick stop, and the same roll of paper towels costs $1 at Big Supplies, a large, retailer located in a more remote location. If a customer's total cost of travel to Sam's Quick Stop is $2 and is $5 to Big Supplies, which of the following is true?
A) It is cheaper for the consumer to buy the paper towels at Sam's Quick Stop. B) It is more expensive for the consumer to buy the paper towels at Big Supplies. C) It is cheaper for the consumer to buy the paper towels at Big Supplies. D) The consumer is indifferent as to where they buy the paper towels.
If a price ceiling is not binding, then
a. the equilibrium price is above the price ceiling. b. the equilibrium price is below the price ceiling. c. it has no legal enforcement mechanism. d. None of the above is correct because all price ceilings must be binding.
Which of the following would likely make the interest rate on a bond higher than otherwise?
a. both high credit risk and a long term b. high credit risk but not a long term c. a long term but not a high credit risk d. neither high credit risk nor a long term