Tag: Economics – Others

An everyday low pricing strategy stresses the continuity of retail prices
a prike skimming level.
at a level betow the deep-discount sales prices of competions.
based on variable production costs.
at a level between the regular price and the deep-discount sale prices of compettors.

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

In the foreign exchange market for Japunese yen (where price is measured by U.S. dollars), if the supply of yen is greater than the demand for yen, a ◻ of yen cecurs, which will lead to a q, of the yen.◻ shortage; appreciationshortage; depreciationsurplus; appreciationsurplus; depeeciation

Following a liver transplant, immunosuppressive drugs are given to reduce the immune response that causes rejection. The nurse recognizes that these drugs affect:
a. kidney function
b. the absorption of nutrients
c. pancreatic function
d. the gastrointestinal (GI) tract
e. the regulation of insulin

Suppose the government decides to increase taxes by $50 billion to increase Social Security benefits by $70 billion. If the MPC is 0.8 , will aggregate demand increase, decrease, or remain unchanged at current prices with this combined tax transfer policy?
No change
Increase in AD
Decrease in AD

Capital consumption allowance refers toa. the purchase of used factories.b. poople sending money between countries.c. capital goods being used up in production through ratural were, obsolverence, and acciluuel deturised. the pherchase of goods that allow households to consume more service.

Why did the Fed adopt near-zero interest rates during the Great Recession and the COVID-19 pandemic?
Group of answer choices
To make borrowing cheaper and stimulate economic growth.
To strengthen the U.S. dollar against other currencies.
To restrict access to financial markets.
To curb inflation.

Consider the population regression model: Y=α βx ε
Remember that the OLS estimator of β can be approximated by the following expression: hat(β)~~β Cov(x,ε)Var(x)
In order for hat(β) to approach β in large samples we need to assume:
Cov(x,ε)=0
Cov(x,ε)<0 We don't need any assumptions. Var(x)=0