Borrowing from foreign banks by U.S. firms represents a capital inflow
a. True
b. False
Indicate whether the statement is true or false
True
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What is the difference between positive and normative analysis?
What will be an ideal response?
The relative price of a textbook is
A) the money price of the textbook divided by the money price of some other good. B) the price of the textbook compared with what students think it should cost. C) the amount it cost to make the textbook. D) what the author earned for writing the textbook.
The basic idea behind the convergence theory is:
A. also the basic idea behind the catch-up effect. B. each additional unit of capital provides larger gains when you're coming from behind. C. that countries starting at low levels of income will tend to grow at much faster rates than those starting with high levels of income. D. All of these are true.
Which of the following statements best describes the substitution bias in the construction of the CPI?
A. Not taking into account that consumers alter their buying habits as new products come into being and lifestyles change, for example, the rising popularity of cell phones instead of land-line phones. B. Not accounting for the fact that consumers are effectively getting more product for their money because technological changes have led to improvements in quality and lower production costs over time. C. The failure to recognize that over time consumers alter the goods they buy, switching from relatively high priced goods toward lower-priced alternatives. D. The failure to capture the fact that consumers have made substitutions in their shopping habits: shifting from high-priced department stores to lower-priced discount stores.