Category: Economics

Corporate social responsibility (CSR) refers to the consideration of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm to accomplish social benefits along with the traditional economic gains that the firm seeks.
Group of answer choices
True
False

Question 3
The creation of a Federal Reserve System was recommended by
Hint:
Think of The Panic of 1907 and it’s results which lead to The Federal Reser System.
The U.S. Treasury.
None of the Answers are Correct.
The Federal Bureau of Investigation.

Horizontal analysis:Muliple Choice
Is also coled verical anslysh.
Is the presentesion of finesciel retios.
Is a tool used to evaluate firancial statement mems relative to indurify shatroct.
Is a method used to evaluate changes in finenciel dats actoss time.
Evaluates finoncial dota scross industios.

Suppose that real interest rates increase acrossEurope. Explain how this development affects U.S. net capital outflow. Then explain how it affects U.S. net exports by using a formula from the chapter and by drawing a diagram. What happens to the U.S. real interest rate and real exchange rate?
Answer:
When real interest rates rise in Europe, European assets become more attractive relative to U.S. assets. U.S. residents increase their purchases of European (foreign) assets and foreign residents reduce purchases of U.S. assets. Net capital outflow (NCO), defined as purchases of foreign assets by U.S. residents minus purchases of U.S. assets by foreigners, therefore increases (NCO rises).
Use the identities from the chapter:
NCO = NX (net capital outflow equals net exports)
NX = S − I (net exports equal national saving minus domestic investment)
Because NCO increases, and NCO = NX, U.S. net exports rise. Intuitively, the rise in purchases of foreign assets by U.S. residents means more dollars are supplied in the foreign-currency exchange market to buy foreign currency; that increased supply of dollars causes the U.S. real exchange rate to depreciate (the real value of the dollar falls). The depreciation makes U.S. goods cheaper to foreigners and foreign goods more expensive to U.S. residents, so net exports increase.
What happens to the U.S. real interest rate? In an integrated world capital market, the U.S. real interest rate moves toward the new (higher) foreign rate. If world (or European) rates increase and financial markets are open, the U.S. real interest rate tends to rise as well (in a small open-economy model the domestic real interest rate equals the world real interest rate, so it increases to the new higher level). The rise in the global real rate also tends to reduce U.S. investment (I), raising S − I and reinforcing the increase in NCO.
Diagram (market for foreign-currency exchange):
Step illustrated by diagram: supply of dollars shifts right (S → S’) because U.S. residents buy more foreign assets when European rates rise.
Result: the equilibrium real exchange rate ε falls (depreciation of the dollar), and the quantity of net exports (NX) increases.
Summary:
U.S. net capital outflow (NCO) increases when European real rates rise.
Because NX = NCO (and NX = S − I), U.S. net exports increase.
The U.S. real exchange rate depreciates (ε falls) as the supply of dollars in the foreign-exchange market increases.
The U.S. real interest rate tends to rise toward the higher foreign (European) rate in integrated global capital markets.

The “multiplier” effect of tourist spending ultimately:
Group of answer choices
is only needed when calculating direct impacts
Widely distributes the total economic impact of tourist’s household incomes
Does not affect the economy as much as believed
Has no effect on the local economy due to leakage

Which of the following describos the Producer Price Indox?
A strong indicator of economic growth, but not wealth distribution
A popular economic indicator, despite its statistical issues
Used by the Conference Board to assess economic growth
An evaluation of crude, intermediate, and finished goods