If Happy Cows, a milk producer, purchases a dairy farm, this is an example of _______
A) backward integration
B) forward integration
C) divestiture
D) outsourcing
A) backward integration
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If the Fed bases its monetary policy on judgments of its policymakers about the current needs of the economy, it is following
A) discretionary policy. B) a money targeting rule. C) an inflation targeting rule. D) wait-and-see policy. E) a monetary base instrument rule.
Assume the Keynesian transmission mechanism is operational and the economy is currently operating in the horizontal portion of the AS curve. If the money supply decreases and the demand for money curve is downward sloping and investment is interest-____________, then Real GDP will ___________________
A) sensitive; fall B) insensitive; fall C) sensitive; rise D) insensitive; rise E) sensitive; remain unchanged
What would the aggregate expenditure model have to take into account in order to explain stagflation?
a. shifts in the aggregate supply curve b. shifts in the aggregate expenditure curve c. shifts in the aggregate demand curve d. shifts in the equilibrium curve
If a model fits reality but doesn't generate testable predictions, it is of little value to economists
Indicate whether the statement is true or false