What are some distinctions between light industry and heavy industry? Why do economies tend to start with light, and move to heavy industries?
What will be an ideal response?
Usual distinctions include consumer vs. capital goods and labor- vs. capital-intensive goods. Economies tend to start with light industry because they require little capital and skills, in accordance with factor endowments. Also light industry tends to produce goods needed immediately and affordable by a large share of the population.
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Which of the following changes will cause a downward movement along the demand curve for reserves?
A) A decrease in deposits held by banks B) A decrease in the federal funds rate C) An increase in deposits held by banks D) An increase in the federal funds rate
This chapter has spent a lot of time dealing with issues of wealth and consumption. One suggestion has been to have a tax on wealth. What are some of the benefits of this proposal?
What will be an ideal response?
One problem that investors in foreign countries face is the possibility of a decline in the value of that foreign country's currency. Which of the following would be an effective way to offset this problem?
A) Be ready to pull out at the first sign of trouble. B) Convert as many of your dollars into their dollars as possible. C) Hedge through currency swaps. D) Finance your investment outside of that country.
When the slope of a demand curve is constant, price elasticity of demand can vary.
Answer the following statement true (T) or false (F)