The L in OLI theory stands for loyalty, and this factor makes it more difficult for firms to substitute foreign operations for domestic as they fear a loss of sales due to negative publicity
Indicate whether the statement is true or false
FALSE
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Why did the government use expansionary monetary policies in the late 1970s, and what was the principal negative macroeconomic effect of these policies?
What will be an ideal response?
As actual output falls below the potential level in the short run, which of the following is most likely to occur? a. More resources will become unemployed. b. The price level will increase
c. Real GDP will increase. d. Nominal GDP will remain constant. e. The natural rate of unemployment will fall.
Consider the salary of Mary Sue Nelson, a sales agent for Plain Truth Advertising. She has an effort cost of C = e2 and a reservation wage of $1,500 so that her compensation package is W = 1,500 + 0.2 Q, where the CEO sets the incentive at 0.2 and Q = 200 e. Here effort is known only by the employee. There is a random shock to output each period whose mean is zero. (a) What is the optimal effort for Mary Sue Nelson? (b) On average, what total wage or salary will she earn each month? (c) On average, what is the output of sales contracts that she makes? (d) On average, what kind of profit will the CEO earn off of Nelson's work?
What will be an ideal response?
In the long run, the inflation rate depends primarily on the growth rate of the money supply
a. True b. False Indicate whether the statement is true or false