Economics and Strategy 3

Question 1

What Happens when there is a rise in price of an item with many substitutes.

This causes a sharp decrease in demand

Answer 1

a high price elasticity of demand

Question 2

1) An increase in the correlation of emerging stock markets with world markets
2) A change in the volatility of emerging stock market returns
3) A decrease in local firms’ cost of capital
4) increase in investment growth rates

all are results of

Answer 2

the effects from opening an emerging stock market to foreign investment include

Question 3

all international payments made by one nation to another, including capital movements.

Answer 3

Are included in The balance of payments accounts

Question 4

What is equal to the price of all goods and services produced by a domestic economy for a year

Answer 4

GDP

Question 5

The central bank’s most important function

Answer 5

is to regulate the money supply in accordance with policies established to promote the nation’s economic well-being.

Question 6

What seeks to provide a supply of money, employment, and a relatively stable price level

Answer 6

Monetary policy

Question 7

What can be effective at reducing costs in a competitive market

Answer 7

Supply chain management

Question 8

What automatically correct a lack of equilibrium in the balance of payments by revaluing currencies

Answer 8

Freely fluctuating exchange rates

Question 9

major components are total worker hours and labor productivity.

Answer 9

GDP

Question 10

In the law of comparative advantage

Answer 10

The respective opportunity costs determine which country will produce which product

Question 11

What involves maximizing satisfaction.

Answer 11

Utility