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| Section | Objectives |
|---|---|
| Key Topics Across All Competencies | - Currency Appreciation and Depreciation - International Trade Policies (Tariffs, Quotas) - Supply and Demand Shifts - Elastic vs. Inelastic Goods - Global Business Strategies and Porter's Framework - Foreign Direct Investment (FDI) Impacts |
| Competency 3: Economic Decision-Making by Firms and Customers | - Firm Behavior Under Different Market Structures (Perfect Competition, Monopoly, Oligopoly) - Consumer Behavior (Budget Constraint, Indifference Curves) |
| Competency 1: International Trade and Currency Exchange | - Currency Exchange Rate Determination - Impact of Interest Rates on Financial Flows and Exchange Rates - Introduction to International Trade Theories |
| Competency 2: Political and Economic Forces | - Market Economy vs. Command Economy - Property Rights and the Rule of Law |
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NEW QUESTION # 134
When there is an expectation of lower income in the future, what is the effect on the demand curve for a normal good?
Answer: A
Explanation:
InGlobal Economics for Managers, demand for anormal goodincreases with income and decreases when income falls. If consumers expectlower future income, demand for normal goods decreases, causing the demand curve to shift left, making option A correct.
A leftward shift indicates that at every price, consumers are willing and able to purchase less of the good.
Expectations about future income influence present consumption decisions, especially for durable and discretionary goods.
Options C and D incorrectly describe movement along a demand curve rather than a shift. Option B would apply if income were expected to rise.
Therefore, option A is correct.
NEW QUESTION # 135
Which phrase best describes property rights?
Answer: D
Explanation:
Property rights are the legal rights to use, control, transfer, and benefit from an economic resource. Option C is correct because it describes the broad economic meaning of property rights. Secure property rights allow individuals and firms to invest, trade, innovate, and plan for the long term because they can expect to capture the benefits from their resources. Weak property rights increase uncertainty, discourage investment, and raise the risk of theft, expropriation, or contract failure. Option A describes copyright, which protects original works of authorship. Option B describes patents, which protect inventions or processes. Option D describes trademarks, which protect names, brands, and designs used to distinguish products. These are forms of intellectual property, but C is the general definition.
NEW QUESTION # 136
What are weaknesses of the theory of mercantilism? (Choose TWO.)
Answer: A,B
Explanation:
In Global Economics for Managers, mercantilism is widely criticized for two major weaknesses: it leads to inefficient allocation of resources and reduces national wealth in the long run, making options A and B correct.
Mercantilism views global trade as a zero-sum game, where one country's gain comes at another's expense.
As a result, it emphasizes export promotion, import restrictions, and accumulation of precious metals. These policies distort market signals and push resources toward protected industries rather than their most productive uses, leading to inefficiency.
Over time, these inefficiencies reduce overall economic growth and national wealth. Protectionist measures raise prices for consumers, reduce competition, and discourage innovation. Retaliation by trading partners can further harm exports and global welfare.
Options C, D, and E describe modern trade theories, not mercantilism. Mercantilism rejects comparative advantage and free trade.
Therefore, A and B correctly identify weaknesses of mercantilism.
NEW QUESTION # 137
What are examples of fixed costs? (Choose TWO.)
Answer: A,D
Explanation:
InGlobal Economics for Managers,fixed costsare costs that do not vary with the level of output in the short run, making optionsC and Dcorrect.
Option C, astate license fee, is fixed because it must be paid regardless of how much output is produced.
Option D,monthly internet service, is also fixed since the cost remains constant even if production rises or falls.
Options A, B, and E arevariable costsbecause they increase as output increases. Sales commissions depend on sales volume, flour usage depends on bread production, and parts costs rise with the number of devices produced.
Understanding fixed costs is essential for break-even analysis and short-run production decisions. Thus, C and D are correct.
NEW QUESTION # 138
What happens when the Federal Reserve increases the money supply?
Answer: C
Explanation:
InGlobal Economics for Managers, an increase in the money supply leads to arightward shift of the aggregate demand (AD) curve, making option B correct.
An expanded money supply lowers interest rates, encouraging borrowing and spending by households and firms. Consumption and investment rise, increasing total demand for goods and services at every price level.
Options C and D involve supply-side changes, not monetary policy effects.
Thus, option B correctly describes the macroeconomic impact of an increased money supply.
NEW QUESTION # 139
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