The text considers three methods that can be used to obtain empirical estimates of long-run costs in different industries
Of those three, surveys of expert opinion are considered to be most reliable because they are less subject to bias than the other two methods. Indicate whether the statement is true or false
FALSE
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If the simplified version costs $2 million and its probability of success is 75%, whereas the cost of the complicated version is $10million, what is the minimum probability of success for the complicated version that would make the firm indifferent between the two software?
a. 0.3 b. 0.31 c. 0.32 d. 0.33
If large budget deficits push government debt as a share of the economy to higher and higher levels, this will eventually lead to
A) higher interest rates on the government's bonds because it will be less risky to loan the government funds. B) higher interest rates on the government's bonds because it will be more risky to loan the government funds. C) lower interest rates on the government's bonds because it will be less risky to loan the government funds. D) lower interest rates on the government's bonds because it will be more risky to loan the government funds.
The convergence theory predicts that:
A. countries that start out poor should initially grow faster than ones that start out rich, but will eventually slow to the same growth rate. B. poor countries are not generally expected to sustain a high growth rate and surpass the existing rich countries. C. even if countries differ in their rates of savings, population growth, and other features, they will still converge to the same growth rate, although not the same level of income. D. All of these are predicted by the convergence theory.
Which of the following actions could be undertaken if the government wants to reduce a recessionary gap?
A. Increase taxes more than the amount of reduction in government spending. B. Increase taxes and reduce government spending. C. Increase taxes and increase government spending. D. Reduce taxes and increase government spending.