Which would be considered a macroeconomic study? A study of the effect of:
A. a new tax on the profits of a business.
B. changing government spending to increase employment.
C. lower interest rates on a firm's investment.
D. a decrease in the price of automobiles on automobile sales.
Answer: B
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________ economic growth occurs when, after growth, exports and imports rise by the same proportion
A) Rising B) Neutral C) Biased D) Technological
Suppose that labor is mobile between countries A and B. If the relative demand for goods rises in country A, then labor can flow from ______________. It may be possible in this situation for countries A and B to __________________ which would help to___________________
A) country A to country B; fix the exchange rate between the two countries (or have a common currency); eliminate the risks associated with having a flexible exchange rate. B) country B to country A; impose trade restrictions upon one another; increase employment in country A C) country B to country A; fix the exchange rate between the two countries (or have a common currency); eliminate the risks associated with having a flexible exchange rate D) country A to country B; adopt flexible exchange rates; reduce the risk of exchange rate fluctuations
When interest rates in the U.S. decrease, we can expect NCO to:
A. increase, because capital inflow is decreasing. B. increase, because capital inflow is increasing. C. decrease, because capital inflow is increasing. D. decrease, because capital inflow is decreasing.
Smyth Industries operated as a monopolist for the past several years, earning annual profits amounting to $50 million, which it could have maintained if Jones Incorporated did not enter the market. The result of this increased competition is lower prices and lower profits; Smyth Industries now earns $10 million annually. The managers of Smyth Industries are trying to devise a plan to drive Jones Incorporated out of the market so Smyth can regain its monopoly position (and profit). One of Smyth's managers suggests pricing its product 50 percent below marginal cost for exactly one year. The estimated impact of such a move is a loss of $1 billion. Ignoring antitrust concerns, compute the present value of Smyth Industries' profits if it remains a duopolist in this market when the interest
rate is 5 percent. A. $210 million B. $1.05 billion C. $200 million D. $100 million