Principles Of Microeconomics 7th Edition Fred M. Gottheil - Solutions

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The Big Push development strategy relies principally ona. entrepreneurial initiativeb. direct foreign investmentc. governmentd. foreign economic aide. backward and forward linkages
Forward linkages are investments in industries that createa. investment opportunities for other industries, using the goods produced in the first as inputs.b. demands for inputs, inducing investments in other industries to produce those inputs.c. future demands for investments in the same
The unbalanced development strategya. relies on government to finance each stage of the strategy.b. creates forward, but not backward, linkages, which trigger top-down development.c. creates backward, but not forward, linkages, which trigger bottom-up development.d. creates forward and backward
The big-push strategy proposes all-at-one-time multiple investments becausea. they provide markets for each other.b. they create forward, rather than backward, linkages.c. they involve a smaller initial investment than do alternative strategies.d. unsuccessful projects would be canceled by
The difference between economic aid given in the form of loans from aid given in the form of grants is thata. loans are for development use, grants for supplementing food needsb. grants are for development use, loans for supplementing food needsc. loans may result in high interest payment
One of the major factors contributing to the demographic trap that inhibits the economic development of bottom billion LDCs isa. late marriages, resulting in fewer children and a smaller labor forceb. birth rates exceeding death ratesc. death rates exceeding birth ratesd. massive immigratione.
One of the major factors contributing to the political instability trap that inhibits the economic development of bottom billion LDCs isa. the prevalence of civil warsb. excessive competition among political partiesc. their choice of domestic monarchies to replace colonial political ruled. the
Compare and explain changes in LDC birth and death rates over the past 50 years.a. Birth rates fell faster than death rates because modern contraceptive became commonplaceb. Birth rates fell faster than death rates because of massive emigration of young child-bearing people.c. Death rates fell
During the past 50 years, the world's population experienceda. substantial increases in per capita GDP for 20 percent while the remaining 80 percent remained in abject povertyb. substantial increases in per capita GDP for 50 percent while the remaining 50 percent remained in abject povertyc.
The vicious circle of poverty associated with LDCs refers toa. their ability to borrow but inability to pay their debts.b. their traditional sector becoming modern only to revert back to traditionalism.c. their misuse of capital goods over and over again.d. their being poor because they choose
What groups and organizations specialize in direct foreign investment and foreign aid?
What problems arise with different economic development strategies? How can South Africa avoid uncontrolled growth and investment?
What basic strategies should South Africa pursue for economic development, particularly in terms of foreign investment?
What are backward and forward linkages, and how do they contribute to a country’s economic development?
Show the effect of foreign direct investment on an economy’s production possibilities curve.
Distinguish between the impact on a recipient LDC of foreign direct investment and foreign economic aid.
Describe the natural resource trap.
Describe the political instability trap.
Describe the demographic trap.
While countries with relatively low per capita GDP have been with us from time immemorial, there has been for many an encouraging change in their economic fortunes during the past 50 years.Still, there remains a set of countries that have not experienced much change.Discuss.
Interest payments on a country’s international debt are referred to asa. debt service.b. loan payments.c. currency devaluation.d. trade imbalances.e. income payments on investments.
Which of the following is an example of a unilateral transfer?a. The United States borrows dollars from Italy in the foreign exchange market.b. Spain purchases oil from Venezuela.c. Norway pays dividends on bonds issued to Chinese citizens.d. A French citizen working in the United States sends
All of the following except one are included in a nation’s balance on current account. Which one?a. Foreign exchange reservesb. Unilateral transfersc. Export of servicesd. Income receipts on investmentse. Income payments on investments
If Costa Rica uses import controls to maintain its foreign exchange reserves, it means that the Costa Rican governmenta. uses international borrowing to finance its imports.b. sells foreign exchange reserves to finance its imports.c. imposes tariffs and quotas to limit its imports.d. devalues the
One problem with floating exchange rates is that theya. do not take into account shifts in the demand for a nation’s currency.b. do not take into account shifts in the supply of a nation’s currency.c. add uncertainty to international trade.d. decrease price variability in world markets.e.
Which of the following groups would benefit from a depreciation in the euro relative to the Canadian dollar?a. Exporters of Canadian goodsb. Exporters of European Union goodsc. Consumers of Canadian goods in Germanyd. Consumers of European Union goods in Germanye. Importers of Canadian goods
If there is an appreciation in the dollar relative to the Japanese yen, thena. more dollars are needed for Americans to buy Japanese goods.b. Americans get fewer yen per dollar on the foreign exchange market.c. American goods become cheaper for the Japanese to buy than before.d. American goods
If the United States fixes the exchange rate of Indian rupees per dollar at 45 rupees per dollar, then to maintain it at that ratea. Indian and American exporters and importers must agree to keep their mutual trade in balance.b. Indian and American exporters and importers must agree not to trade at
If the supply curve for euros shifts to the left, thena. the demand curve for euros will shift to the right.b. the equilibrium exchange rate of euros for other currencies will rise.c. there will be more euros in equilibrium held in world markets.d. the equilibrium exchange rate of euros for other
The Times of London reported that the demand for U.K. pounds in 2011 shifted to the right. What could have caused the shift?a. Americans bought more U.K. goods.b. More American goods were bought in the United Kingdom.c. Incomes in the United Kingdom increased.d. Incomes in the United Kingdom
Where can customers find current information about exchange rates?
In basic terms, how do exchange rates work? What do customers traveling in foreign countries need to consider about exchanging currencies?
What information is available about foreign currencies?
How would each of the following events affect the quantity demanded and quantity supplied schedules in practice problem 1? Indicate whether the numbers in the schedules would increase or decrease and the resulting increase or decrease in the equilibrium exchange rate. Then show how each event would
Suppose the following data represent Egypt’s international transactions (in pounds). What is Egypt’s balance of trade? What is its balance on current account? What is its balance on capital account? ITEM MERCHANDISE EXPORTS CHANGE IN FOREIGN ASSETS IN ISRAEL EXPORTS OF SERVICES INCOME RECEIPTS
Change the numbers in the table in practice problem 1 so that the equilibrium exchange rate is 6 pounds per U.S. dollar. What explanation can you offer for such changes?
The only information given for the following table is that the equilibrium exchange rate is 5 Egyptian pounds per U.S. dollar.Fill in the blank cells, constructing quantity demanded and quantity supplied schedules so that the equilibrium exchange rate occurs at 5 pounds per dollar. POUNDS PER U.S.
Balance of payments problems and long-term international debt plague the less-developed economies. The two issues are related. Explain.
Some economists argue that our budgetary deficits contribute to our balance of payments problems.How do they make their case?
In some cases, a balance of payments problem really isn’t a problem at all. Yet in other cases, it could signal a fundamental problem in the economy.Explain.
How would each of the following affect the U.S.balance of payments account?a. Every month, a Bangladeshi professor at the University of Utah sends $200 to his family living in Bangladesh.b. A Japanese businessperson in Nagasaki buys 100 shares of General Motors stock.c. The U.S. government sells 20
What are the major categories and items in a balance of payments account?
What control mechanisms can a government introduce to support its exchange rate policy?
How can the government fix an exchange rate?Discuss the limitations that a government faces in maintaining a fixed rate.
What circumstances would shift the supply of U.S. dollars on the foreign exchange market to the right?
What circumstances would shift the demand curve for U.S. dollars on the foreign exchange market to the right?
Think about the United States and Japan. Suppose the exchange rate, yen per dollar, falls from 125 yen to 100 yen. How would that affect trade between the United States and Japan?
Each nation has its own currency. Americans have the dollar, Italians have the euro, and the British have the pound. So how can they trade?
A customs union is several countries that agree to free tradea. among themselves and a common trade policy with other countries.b. among themselves and allow each to determine its own policy with other countries.c. among themselves and with every other country.d. with other countries, fixing common
The members of the North American Free Trade Agreement (NAFTA) area. Canada and the United States.b. Canada, Mexico, and the United States.c. Japan and the United States.d. the European Community, Canada, Mexico, and the United States.e. Canada, Mexico, North West Territories (NWT), Greenland, and
The main objective of the World Trade Organization(WTO) is toa. promote free trade worldwide.b. create a universal tariff system.c. provide agricultural subsidies mainly to developing economies.d. convert tariff barriers to nontariff barriers.e. organize all nations into one unified customs union.
When the United States imposes a tariff against Canadian leather goods, ita. limits its imports of Canadian leather goods to a specific quantity.b. increases the difference between the U.S. price and the Canadian price of leather goods on the U.S. market.c. reduces the difference between the U.S.
Which of the following arguments against free trade is based on the idea that industries should be protected through their learning-curve stage of development?a. Cheap foreign laborb. Diversity of industryc. Infant industryd. Antidumpinge. Retaliation
The most important trading partner of the United States isa. Germany.b. the United Kingdom.c. China.d. Mexico.e. Canada.
The terms of trade are said to worsen for Cuba whena. its volume of exports increases more than its volume of imports.b. its volume of imports increases more than its volume of exports.c. its export prices increase more than its import prices.d. its import prices increase more than its export
The table that follows shows the production and consumption of wheat and sugar in Canada and Cuba under conditions of no trade. When free trade occurs, the entire gains from such trade shift completely to Canada when the price of sacks per bushel isa. 3 sacks per bushel.b. 4 sacks per bushel.c. 5
If Cuba has a comparative advantage over Canada in the production of sugar, it means thata. Cuba can produce more sugar than Canada.b. the price of sugar is higher in Cuba than it is in Canada.c. the price of sugar is higher in Canada than it is in Cuba.d. fewer resources are used to producing a
While tea is the beverage of choice in both China and the United Kingdom, the Chinese have an absolute advantage over the United Kingdom in producing tea, which means thata. China can produce more tea than the United Kingdom.b. price of tea is higher in China than in the United Kingdom.c. price of
What government agencies exist to assist firms in exporting their products?
What barriers, if any, exist to exporting bikes into France, Italy, and Germany?
Fill in the blank cell—labor-hours to produce a unit of French wine—to show no advantage to either France or England in trading with each other. Explain.
Fill in the blank cell—labor-hours to produce a unit of French wine—to show France’s comparative advantage in producing cloth.Explain.
England and France can produce both wine and cloth. The English use 80 labor-hours to produce a unit of cloth and 40 labor-hours to produce a unit of wine. The French use 100 labor-hours to produce a unit of cloth.Fill in the blank cell—labor-hours to produce a unit of French wine—to show
Graph the situations described in practice problems 1–3.
Suppose the United States imposed a $100 tariff on each Japanese VCR imported. What would happen to the equilibrium price and total quantity bought and sold in the United States?
Suppose the United States allowed Japan free trade privileges in the U.S. market. What would happen to the equilibrium price and total quantity of VCRs bought and sold in the U.S. market?
The U.S. demand for, U.S. supply of, and Japanese supply of VCRs are shown in the following schedule.If Japanese VCRs are prohibited from entering the United States, what will be the equilibrium price and quantity bought and sold by Americans in the VCR market in the United States? UNITED STATES
Is the United States a nation that believes in and promotes free trade? Trace the history of U.S.tariffs to make your point.
NAFTA is a free trade agreement among the United States, Canada, and Mexico. How does it differ from the trade agreement that binds the European Union?
One of the most important ideas promoting free trade was GATT’s “most-favored-nation” clause.Explain.
The European Union started out as a customs union of six nations, but that is not what it is today. What is it today?
Who are the major trading nations of the world?Who are the major trading partners of the United States?
The Irish complain that they never got a chance to make automobiles because the English, their major trading partner, are more experienced and therefore more efficient at it. Would-be Irish automakers ask their government to impose a tariff on foreign automobiles to help them get started. Can you
Suppose France can produce surface-to-surface missiles more efficiently than we can, while we are able to produce artichokes more efficiently than they can. Should we specialize in artichokes, trading them for French missiles? Make the pro and con arguments.
Many Detroit autoworkers do not buy the argument that everybody gains in international trade.What’s their point?
How do tariffs work? Illustrate by referring to U.S. lumber imports from Canada, using any set of quantities and prices to make your point.
Using 1990 as the base year (= 100), suppose Egypt’s terms of trade in 2010 were 60.Explain what that means for Egypt in 2010 compared to Egypt in 1990.
Admitting all exceptions to the rule, the rule is that free trade benefits all nations. Make the case.
Consider two trading partners: Canada and Ireland. Suppose someone told you that in the production of corn, Canada has an absolute advantage, but in the production of sheep, Ireland has a comparative advantage. What does Canada’s absolute advantage tell you? What does Ireland’s comparative
The World Trade Organization (WTO) has often been on the front pages of our newspapers. What is its history and what is it designed to do?
The negative income taxa. is an across-the-board tax cut designed to reduce income inequality.b. applies to poor people only if they are not earning income.c. applies to everyone not earning income.d. is a cash payment by government designed to provide a minimum level of income for the poor.e. is
Economists define poverty in two different ways.They area. as a percentage of median income and as a percentage of average income.b. as meeting basic needs and as earning a critical minimum income.c. as a percentage of median income and as meeting basic needs.d. as a percentage of median income and
Advocates for income inequality argue that equalitya. is unnatural.b. undermines efficiency.c. denies private property.d. undermines consumption.e. creates excess saving.
The proof of the theory—proposed by A. P. Lerner—that income equality ends up creating the highest total utility for a society rests on the assumption thata. no one in the society opposes the income equality outcome.b. everyone has the same marginal utility curve for money.c. property is evenly
John Rawls’s theory of justicea. argues that if people were to look objectively at the issue of income distribution, they would choose to allow for inequality.b. argues that if people were to look objectively at the issue of income distribution, they would choose equality.c. argues against
The distribution of wealth in the United States isa. more unequal than its distribution of income.b. more equal than its distribution of income.c. about the same as its distribution of income.d. compared to other countries, the most equal in the world.e. compared to other countries, themost unequal
The one thing we can say, comparing the U.S. Gini coefficient to those in developing countries of Sub-Sahara Africa, is that there isa. greater income equality in the United States.b. a greater number of people in poverty in the United States.c. a greater percentage of people living in poverty in
If the Lorenz curve for a country, let’s say, Costa Rica, falls along the diagonal, then we know that for Costa Rica,a. income equals wealth.b. 100 percent of Costa Rican financial assets are in the form of income.c. there is 100 percent poverty in Costa Rica.d. there is perfect income
Questions about the rich and poor have always been part of our intellectual and ethical heritage.The chapter begins with a brief commentary on philosophers who considered these important questions. If you recall, they werea. Hobbes and Locke.b. Marx and Engels.c. Plato and Aristotle.d. Hegel and
The Chilean Gini coefficient in the mid-1990s was 0.57. The American Gini was 0.46. What information do these numbers reveal?a. Income distribution was more unequal in the United States than in Chile.b. Chilean wealth was more equally distributed among its population than U.S. wealth was among its
Briefly explain the economic positives and negatives inmaking a case for income equality and for income inequality.
What are the major federal poverty programs? Who is eligible for these programs? What benefits are available?
What are the current poverty conditions in the United States?
Use appropriate percentages to fill in the blank cells of the table that represents a set of data for a Lorenz curve. PERCENT OF POPULATION 20 20 PERCENT OF INCOME 2 20 20 20 20 50
Suppose an economy consists of five people whose combined income is $100,000. Their individual incomes are Leslie, $4,000;Lynn $8,000; Kristen, $18,000; Paul, $25,000; and Carol, $45,000. If the government creates a negative income tax system with a minimum income of $10,000 and a tax rate of 50
Compare the arguments for greater income equality made by Rawls and Lerner.
How does a negative income tax system work?Why do some economists prefer it to government assistance as a means of redistributing income?
The case for equality can be made on the grounds that it generates the greatest total utility for society.Explain.
The case for inequality can be made on the grounds that equality stymies economic growth.Explain.
Discuss the two different ways economists define poverty.

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Principles Of Microeconomics 7th Edition Fred M. Gottheil - Solutions

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