When firms differentiate their products, they
a. provide information to consumers with no additional use of productive resources
b. always increase their profits
c. always create real differences among products
d. frequently create artificial or superficial differences among products, thus raising production costs
e. usually strain the physical capacity of their plants
D
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Statistical evidence suggests that
A) free trade policies promote economic growth more effectively than do import substitution policies. B) import substituting policies tend to promote effective exploitation of scale economies. C) import substitution tends to lead to relatively low effective rates of protection. D) import substitution is to this day the preferred growth strategy promoted by the World Bank. E) import substitution proved to be the most effective aid for developing countries before 1970.
Economists use a model that is a literal description of business’ behavior.
Answer the following statement true (T) or false (F)
The marginal propensity to consume (MPC) is computed as the change in:
a. consumption divided by the change in savings. b. consumption divided by the change in disposable personal income. c. consumption divided by the change in GDP. d. None of these.
The current account balance is equal to
A. Trade balance + services balance + capital account balance. B. Total payments made by residents of the United States to foreigners plus total payments made by foreigners to residents of the United States. C. Trade balance + unilateral transfers + net investment income. D. Trade balance + services balance - capital account balance.