If a negative externality results from the production of chemicals, an external cost is imposed on parties not directly involved in the market for the chemicals.
a. True
b. False
Indicate whether the statement is true or false
Question 2The short-run Phillips curve suggests that ____ rates of unemployment can be traded off for ____ rates of inflation.
a. lower; higher
b. greater; relatively high
c. less; relatively low
d. less; relatively high
Question 3Which of the following limit the direct creation of new jobs through foreign investment?
a. Availability of large number of unemployed workers
b. Nature of the industries in which investment is allowed
c. Low cost of setting up the capital-intensive industries
d. High percentage of youth in the country's population
e. Regulation on technology transfer
Question 4When positive externalities are present, it leads to an underallocation of resources in that area relative to that which is socially desirable.
a. True
b. False
Indicate whether the statement is true or false
Question 5At lower rates of inflation and higher rates of unemployment, the slope of the Phillips curve is
a. very steep.
b. vertical.
c. horizontal.
d. less steep.
Question 6The host country's balance-of-payments problem tends to worsen when foreign firms:
a. invest solely in capital-intensive industries.
b. repatriate their profits to the headquarters from the host country.
c. acquire the foreign operations in order to diversify corporate investment holdings.
d. refuse to share technological expertise with the host country.
e. export all products to other countries.
Question 7When negative externalities are present, it leads to an underallocation of resources in that area relative to that which is socially desirable.
a. True
b. False
Indicate whether the statement is true or false
Question 8The novelty of Phillips' article was his finding of a ____ correlation between ____ and ____.
a. positive; unemployment; the interest rate
b. negative; inflation; the exchange rate
c. negative; unemployment; inflation
d. positive; the rate of growth of the money supply; inflation
Question 9Which of the following statements is true?
a. Multinational firms tend to reduce the flow of technology between countries.
b. Most foreign direct investment is found in labor-intensive industries.
c. Multinationals do not always help to reduce the trade deficit of the host country.
d. Foreign firms contribute to a significant increase in the host country's unemployment rate.
e. Foreign direct investment reduces the stock of capital of the domestic country.
Question 10Pollution taxes always cause deadweight losses, reducing economic efficiency.
a. True
b. False
Indicate whether the statement is true or false
Question 11A.H. Phillips developed the Phillips curve concept by looking at the relationship between:
a. inflation and unemployment.
b. wages and employment.
c. wage inflation and monetary policy.
d. inflation and output.
Quick Reply
