International
Why do companies participate in FDI?
To increase comparative advantage.
The Federal Reserve purchases $10,000 of bonds back from the public. The GDP of the U.S. increases by how much due to this transaction?
$0. Purely financial transactions are not included in the calculation.
What two characteristics do public goods have?
Rivalry in consumption & excludability
What are the three factors of production according to Adam Smith?
Land, labor, capital
Oh no! A tomato farm that sources their tomatoes for local pizza restaurants burned down! Would this move the pizza supply curve to the right or left?
Left (decrease)
Nvidia, a U.S.-based GPU manufacturer, invests in TSMC, a Taiwan-based manufacturer of semiconductor chips, is an example of [blank] FDI
vertical
Country A has much higher productivity than Country B. Therefore Country [x] has a higher standard of living than Country [y].
A, B
Who wins in trade according to the Stolper-Samuelson Theorem?
Owner of the abundant factor
What is Jeremy Bentham’s utility theory?
Humans act to maximize pleasure and minimize pain
We see that market efficiency is maximized in a state of [ ]
equilibrium
Burger King, a U.S.-based restaurant chain, purchases a chain of burger restaurants in China. This is an example of [blank] FDI.
horizontal
What are the three stages of the Law of Diminishing Returns?
Increasing Marginal Returns, Diminishing Marginal Returns, Negative Marginal Returns.
What are the four components of GDP?
Consumption, Investment, Government Spending, Net Exports
According to Malthus’ population theory, if left unchecked, [ ] will outpace [ ]
population growth will outpace production of food
Banks that have more liabilities than assets are considered to be [ ]
insolvent
The demand for American goods continues to lower every year. In the long run how does this affect the American dollar?
The American dollar depreciates.
In a given year the banks in the U.S. provide a real interest rate of 8% and a nominal interest rate of 13%, what is the inflation rate for this year?
5%
If the price level increases, what happens to the value of money?
The value of money decreases
According to feminist economists, the exclusion of [ ] unjustly distorts economic growth
traditionally feminine work such as unpaid domestic and volunteer work
The theory of Money Neutral states that in the long-run changes to the money supply only affects [ ] variables.
nominal
Year after year, China increases its productivity. In the long run how does this affect the Chinese yuan?
The Chinese yuan appreciates.
What is the Adverse Selection Problem?
When high-risk borrowers act as if they were low-risk borrowers.
Suppose Country A places numerous government regulations on its businesses. Compared to Country B, who places little to no government on its businesses, which country will experience greater economic growth in the long run.
B
What is bounded rationality?
humans do not possess the capacity for perfect rationality, face cognitive, time, and informational constraints
The real interest rate will be 0% in what case?
If the nominal interest rate and inflation rate are equal