A market system tends to restrict business risk to owners and investors. This results in which of the following benefits?
A. A more stable macroeconomy with fewer recessions.
B. Firms are better able to attract inputs, as these inputs do not have to share the risk.
C. Government agencies are better prepared to help when businesses fail.
D. Consistently lower prices for consumers.
Answer: B
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When real GDP exceeds aggregate planned expenditure
A) an unplanned increase in inventories occurs. B) real GDP remains at its equilibrium. C) real GDP increases. D) firms increase production. E) an unplanned decrease in inventories occurs.
If a bottle of fine French wine costs US$250 in the U.S., 2500 rand in South Africa, there are no transaction costs, and the exchange rate is 20 rand/US$, then
A) there is an arbitrage opportunity by buying the wine in the U.S., and selling it in South Africa and the price in South Africa will drop. B) there is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will drop. C) here is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will rise. D) there is no arbitrage opportunity.