Which of the following is true?
a. When economies of scale are important in an industry, the domestic market of a small country may not be large enough to support cost-efficient firms.
b. In small countries, firms in industries where economies of scale are important will tend to export little, if any, of their output.
c. The size of the trade sector (exports plus imports) as a share of GDP will generally be larger in more populous countries than in smaller less-populated countries.
d. Countries with higher trade barriers have higher growth rates.
A
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Jimbo has a comparative advantage over Ned in producing a good if
A) Jimbo can produce more of the good than Ned can in a given time period. B) Jimbo has a higher opportunity cost of producing the good than does Ned. C) Jimbo has a lower opportunity cost of producing the good than does Ned. D) Jimbo has to trade off more than Ned does to produce the good.
Why are international investors who have invested in developing nations favoring foreign direct investment and portfolio investment over loans?
A) The process of making loans is usually more difficult for investors to do than foreign direct and portfolio investment. B) The interest rate charged on the loans is usually lower than what can be earned in the U.S. C) It is illegal for banks to make loans to foreign firms. D) Investors have an aversion to owning dead capital and want to make sure that the resources they own do not become dead capital.
Jimmy is very excited about the costume party with a 1990s theme. He is planning to dress up as MC Hammer but is also considering going as a lifeguard from Baywatch. His opportunity cost of arriving dressed like MC Hammer is:
A. the cost of parachute pants that MC Hammer would wear. B. the savings from not purchasing red swimming trunks. C. giving up the alternative of dressing like a lifeguard. D. there is no opportunity cost because he attended the party either way.
If no fiscal policy changes are implemented to fight inflation, suppose the aggregate demand curve will exceed the current aggregate demand curve by $900 billion at any level of prices. Assuming the marginal propensity to consume is 0.90, this increase in aggregate demand could be prevented by:
a. increasing government spending by $500 billion. b. increasing government spending by $140 billion. c. decreasing taxes by $40 billion. d. increasing taxes by $100 billion.