The manager of Slick Lens, a sunglasses manufacturer, notices that the cost to purchase lenses for their sunglasses in the spot market has fallen. As a result of the change, which of the following is true?
A) The manager has more of an incentive to integrate backward.
B) The manager has less of an incentive to integrate backward.
C) The manager has more of an incentive to integrate forward.
D) The manager has less of an incentive to integrate forward.
B) The manager has less of an incentive to integrate backward.
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If exchange rates are floating, a contractionary monetary policy in the United States will cause the dollar to ________ relative to other currencies and cause net capital outflows to ________
A) appreciate; increase B) appreciate; decrease C) depreciate; increase D) depreciate; decrease
Monitoring a manager can be difficult if
A) the owner and manager do not have an enforceable contract. B) the owner cannot easily observe the manager's actions. C) the manager doesn't have to use a time clock. D) the board does not have enough outside directors.
One reason for the huge investment by China into the US economy is the:
A. the desire of China to ‘sink’ the US economy. B. Chinese investors view that US investments are less stable. C. large savings rate in China that encourage capital outflow. D. low savings rate in China which makes the cost of borrowing very low in China.
If the real rate of return is 0 percent, and the inflation rate is 3 percent, then the nominal interest rate must be:
A. 0 percent. B. 3 percent. C. ?3 percent. D. 6 percent.