Economics Quiz A Part 2

Assume that the wool industry is a perfectly competitive industry. Why is it difficult for a wool producer to make excess profits?

• The assumption of free entry into the wool industry

• The fact that the demand curve facing each wool producer is perfectly elastic

• The fact that wool producers are 'price takers'

• The assumption that wool producers in the industry do not 'differentiate' their products

The following table shows costs and revenue schedules for a firm.

• £48

• £0

• £40

• £16

If a country has negative outward FDI, this means that

• outward investment as a percentage of inward investment is falling.

• sales of existing investments abroad exceed new investments abroad.

• sales of foreign assets in the country exceed sales of the country's assets abroad.

• inward FDI exceeds outward FDI.

A horizontally integrated multinational is one that

• produces various stages of production in different countries.

• one which exports more than 50% of output.

• produces different products in different countries.

• produces the same product in more than one country.

Multinational corporations (MNCs) engaging in technological transfer may lead to gains elsewhere in the economy as

• other companies in the host county may try to copy the methods.

• the MNC takes market share from local companies.

• workers trained by the MNC move to other parts of the economy.

• A and C

If a country has negative outward FDI, this means that

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Poor communication between subsidiaries may cause

• diseconomies of scale.

• adverse selection.

• economies of scope.

• all the above

If the total expenditure of the UK public sector is £650bn and revenues to the UK public sector are £325bn each year, then

• the UK will have a PSNB of -£325bn.

• the UK government will have a budget deficit of £325bn.

• the UK will have a PSNB of £325bn.

• the UK general government debt will rise by £325bn

If the government wants to reduce unemployment by influencing the level of activity in the economy, government spending could be _______ and/or taxes could be _______.

• decreased, increased

• increased, decreased

• increased, increased

• decreased, decreased

Fiscal stance refers to

• a government that is running a budget deficit.

• whether a government is pursuing an expansionary or contractionary fiscal policy.

• a government that takes a tough stance when it comes to running the country's finances.

• a government that prefers the use of fiscal to monetary policy for demand management.