A customs union will increase the welfare of its members and the rest of the world if:
a. trade creation is greater than trade diversion.
b. trade creation is less than trade diversion.
c. trade creation is positive.
d. trade diversion is positive.
Ans: a. trade creation is greater than trade diversion.
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The market where borrowers obtain funds from savers is referred to as the:
A) capital market. B) exchange market. C) spot market. D) credit market.
A village has five residents, each of whom has an accumulated savings of $50. Each villager can use the money to buy a government bond that pays 10 percent interest per year or to buy a year-old goat, send it onto the commons to graze, and sell it after one year. The price of the goat that the villager will get at the end of the year depends on the amount of weight it gains while grazing on the commons, which in turn depends on the number of goats sent onto the commons, as shown in the table below. Assume that if a villager is indifferent between buying a bond and buying a goat, the villager will buy a goat.Number of goatson the commonsPrice per 2-yearold goat ($)Income pergoat ($/year)180302752537020465155555 If the villagers purchase the socially optimal number of goats and bonds,
then total village income will be ________. A. $15 B. $125 C. $250 D. $70
In 2015, approximately what percentage of the public debt was held by foreign individuals and institutions?
A. 41 percent B. 34 percent C. 15 percent D. 26 percent
The general monitoring problem implies that:
A. government must intervene to protect national goals. B. competition will ensure common goals among the owners and managers of a firm. C. profit maximization should always be a firm's goal. D. there is a cost of supervising employees so that they work toward the owner's goals rather than their own.