In the term real GDP, what does GDP stand for and what does it measure? What does real indicate?
What will be an ideal response?
Ques. 2When workers are paid on a piece-rate basis, an employer must be able to easily measure each worker's output.
Indicate whether the statement is true or false
Ques. 3What is the difference between foreign direct investment and foreign portfolio investment?
A) Foreign direct investment involves purchases of foreign stock or bonds by individuals or firms, while foreign portfolio investment involves a firm purchasing or building a facility in a foreign country.
B) Individuals engage in foreign portfolio investment, but only firms can engage in foreign direct investment.
C) Foreign direct investment can give a low-income country access to funds and technology it would not otherwise have, but foreign portfolio investment does not expand that access.
D) Foreign direct investment only takes place when governments make official purchases or foreign investments, while foreign portfolio investment takes place when firms, individuals, or the government purchase foreign investments.
Ques. 4Use the equations for public and private saving to demonstrate how total saving in the economy equals investment.
What will be an ideal response?
Ques. 5Movie theaters often charge different people different prices for admission. Why don't theaters charge different prices for popcorn and other food items?
A) It is difficult to limit the resale of food items from those who pay low prices to those who would have to pay high prices from the concession stand.
B) Once people are in the theater, concession stands have monopoly power and can charge everyone the same high prices for food.
C) Although the elasticity of demand for admission differs among customers, most people have the same the elasticity of demand for food items.
D) Concession stand personnel are too busy to ensure that different people pay different prices for food items.
Ques. 6Which of the following is an example of foreign direct investment?
A) American Airlines builds a hub in China.
B) A stock broker from China sells you a Chinese government savings bond.
C) You buy a plane that was made in China.
D) You purchase a plane ticket to China on American Airlines.
Ques. 7Lowering the interest rate will
A) increase investment projects by firms.
B) decrease the value of the dollar and lower net exports.
C) decrease spending on consumer durables.
D) decrease spending on new homes.
Ques. 8An increase in the price level in the United States will reduce exports and increase imports.
Indicate whether the statement is true or false
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