All of the following are true about foreign direct investment (FDI) and portfolio investment EXCEPT
A) increases in the flow of portfolio investments increase the likelihood of financial crisis.
B) both portfolio investments and FDI are the same in that they both give their holders a claim on the future output of the foreign economy.
C) FDI is relatively illiquid compared to portfolio investment.
D) portfolio investments have been on the decline in recent years (or decades).
E) FDI investors must be willing to go through many ups and downs in order to benefit from their long-term investments.
D
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For a syrup producer in central Vermont, profit is maximized at the level of output for which total
A) revenue exceeds total cost by the largest amount. B) revenue exceeds total cost by the smallest amount. C) revenue is maximized. D) cost is minimized. E) revenue equals total cost.
Suppose Brazil has a comparative advantage over other countries in producing almonds, but other countries have an absolute advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil
a. will import almonds. b. will export almonds. c. will either import almonds or export almonds, but it is not clear from the given information. d. would have nothing to gain either from exporting or importing almonds.
An American traveling to Europe will find it easier to make purchases now because:
A. many of the countries in Europe now use the same currency, the euro. B. all of the countries in Europe now use the same currency, the euro. C. most countries in Europe accept U.S. dollars. D. most of the countries of Europe have adopted the British pounds as the standard currency.
The primary inducement for new firms to enter an industry is:
A. increased technology. B. presence of economic profits. C. low capital costs. D. availability of labor.