2. Home Market Argument This argument claims that "the domestic producers have a right to the domestic market. By eliminating foreign imports, more jobs can be created." Problems: The fallacy of this argument can be seen from noting that any shift from imports to domestic production is offset by a contraction of exports. The importing industry can increase its output only by attracting more resources from the export industry.
Less investment abroad means that more money can be spent in the UK economy which greatly effects the current account. Investing in firms situated in the UK means that they will be able to increase their production and become more efficient meaning that their prices will be more competitive and so will export more. So combing
Alternatively, the Government could introduce a free market supply side policy such as reducing the power of trades unions. If unions are powerful, productivity may be lower due to frequent strikes and disruptive working practises such as working to rule. If union power is reduced it helps reduce time lost to strikes, increases labour market flexibility and therefore should help increase UK exports. A third supply side policy could be increasing labour mobility. The nature of the UK housing market means that it is often difficult for workers to move to areas where jobs are available.
Market failure refers to a situation in which the market does not allocate resources efficiently. ANSWER: T TYPE: T KEY1: D SECTION: 2 OBJECTIVE: 7 RANDOM: Y [cxxii]. Since taxes affect only the price paid by the buyer, they cannot have an adverse impact on the allocation of society’s resources. ANSWER: F TYPE: T KEY1: C SECTION: 2 OBJECTIVE: 7 RANDOM: Y [cxxiii]. A monopolist has market power.
✔ 6. Which of the following is an advantage to exporting goods to reach international markets rather than entering into some form of FDI? B A) a greater risk of losing markets to copycat goods producers B) Fewer agency costs ✔ C) An inability to exploit R&D as effectively as if also invested abroad D) Fewer direct advantages from research and development 7. Which of the following is NOT a form of FDI? B A) Joint venture B) Exporting ✔ C) Wholly-owned affiliate D) Greenfield investment 8.
| European competitors were not active in product R&D | B. | American firms were able to take advantage of tax credits for product R&D | C. | The wealth and size of the U.S market gave the firms an incentive to develop new products | D. | The low cost of U.S. labor gave U.S. firms an incentive to develop costly process innovations | | | 11. In recent decades, tariff barriers have been _____ while non tariff barriers have been _____. | | | Student Response | A. | Falling, rising | B.
Chapter 3 Case Assignment 1. What impact will the prospect of deprivatization have on investment managers of privatized firms? a. Most likely, investment managers of privatized firms would be less likely to invest in an organization due to the fear of being declared illegal and having transactions reversed (Brickley, Smith, & Zimmerman, 2009). 2.
With higher GDP the govt will collect more taxes; this is because people will pay more income tax and VAT. This is beneficial because the govt can use this increased revenues to reduce the level of government borrowing and/or spend more on public services and investment in the country infrastructure. Higher economic growth will lead to an increase in demand for labour as firms will be producing more. Therefore unemployment will fall, this has various advantages such as lower govt spending on benefits and less social problems. However economic growth has various costs.
This means that a strong real may lead to a worsening of the balance of trade – much depends on the value of price elasticity of demand for imports and exports. The impact of appreciation depends on the economy. As Brazil was not in a recession during the appreciation of the real, then the aggregate demand increased and helped reduce inflationary pressures and limit the growth rate. However, an appreciation of the real could also reduce inflation. This makes Brazil’s goods more competitive, leading to stronger exports in the long term, which could improve the current account.
Question 1 of 19 5.0 Points One defining characteristic of pure monopoly is that: A. The monopolist is a price taker B. The monopolist uses advertising Correct C. The monopolist produces a product with no close substitutes D. There is relatively easy entry into the industry, but exit is difficult Answer Key: C Question 2 of 19 5.0 Points Which is a barrier to entry? A. Close substitutes B. Diseconomies of scale Correct C. Government licensing D. Price-taking behavior Answer Key: C Question 3 of 19 5.0 Points Other things equal, which reduces competition in an industry?