What is an economic theory or model? What constitutes a "good" economic theory or model?
An economic theory is a simplified version of reality. It is a general statement about the causal relationship between economic phenomena based on facts. A truly "good" theory will predict well, explain economic behavior, indicate to what extent the predicted outcome is expected to occur, and indicate how long it will take for the predicted outcome to be observed.
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If a U.S. firm purchases a foreign firm that violated the Foreign Corrupt Practice Act (FCPA), the U.S. firm ________ responsible for the foreign firm's actions under Part ________ of the FCPA.
A) is; III B) is not; II C) is not; III D) is; II
Non-redeployable durable assets that are dependent upon unique complementary and perfectly redeployable assets to achieve substantial value-added will typically be organized as
a. an export trading company b. a spot market contract c. a vertically integrated firm d. an on-going relational contract e. a joint stock company.
Game theory is:
A. the study of how people behave strategically under different circumstances. B. used by economists to evaluate behavior in a variety of settings. C. a useful tool in predicting strategic behavior. D. All of these statements are true.
Which of the following is true about a liquidity trap situation:
a. Quantitative easing might be a more effective strategy to stimulate the economy than buying short term government securities. b. Quantitative easing may be able to affect long term interest rates even when the Fed is unable to appreciably lower short term interest rates. c. The Fed cannot easily reduce the fed funds interest rate. d. All of the above are true.