Explain why using a firm's profits to reinvest in the company is really not "free borrowing"?
What will be an ideal response?
The profits that the company is using could have alternative uses. Whatever those are determines the cost of using them to reinvest in the company. Therefore, the funds are really not free to use.
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If the U.S. government wants to increase the price of the dollar relative to the euro, it could buy euros with dollars in the foreign exchange market
Indicate whether the statement is true or false
If trade opens up between the two formerly autarkic countries, Australia and Belgium, then
A) the real income of both countries may increase. B) the real income of Australia and of Belgium will increase. C) the real income of Australia but not of Belgium will increase. D) the real income of neither country will increase. E) the real income of both countries will increase.