Economics (Practice) – Flashcards
Unlock all answers in this set
Unlock answersquestion
What are the three factors of production?
answer
The three factors of production are land, labor and capital.
question
What do entrepreneurs do?
answer
They create a market of new goods by combining together land, labor and capital.
question
What is land?
answer
All natural resources used to produce goods and services.
question
What is the distinction between a need and a want?
answer
A need is something that is required for survival, whereas a want is a desire.
question
What is a service?
answer
Something that is done by someone, to or for you.
question
Give an example of a need.
answer
Examples of needs include air, water, food and shelter.
question
What is the difference between scarcity and a shortage?
answer
Shortages are for a short period of time, whereas scarcity means that all resources will eventually run out.
question
Provide a definition of the term Economics.
answer
Economics is the study of how people make choices when they are faced with a limited supply of resources.
question
Because resources are scarce, what three questions must be asked of every economy?
answer
The three questions are: what to produce, how to produce, and for whom to produce.
question
The use of __________ has increasingly replaced human and mechanical labor in production lines in recent times.
answer
Computers
question
Why are there trade-offs?
answer
Because there are a limited number of resources.
question
Tom had to choose between spending $45 on a concert ticket or on groceries. Since he bought the groceries, we know that the opportunity cost of getting the ticket was __________
answer
Too High.
question
Give an example of a business trade-off.
answer
An example would be an increase use of technology or an increase use of labor.
question
Give an example of a society trade-off.
answer
The government an spend money on national defense or money on welfare.
question
What is opportunity cost?
answer
The most desirable alternative given up as a result of a decision.
question
The government is trying to maintain the infrastructure of the country, provide Social Security benefits to citizens, and regulate airline security. Congress has a budget for spending on all three of $1 billion. They decide to spend 45% on infrastructure, 45% on Social Security Benefits, and 10% on regulating airline security. Based on the information provided in this situation, which of the following best describes the opportunity cost?
answer
The government will be able to improve the road system, encouraging more people to drive on vacations. Social Security benefits will provide income for the elderly and disabled, allowing them to spend money, thus boosting the economy. Airline security might be slightly improved because of the ability to hire, but there will not be enough money to provide the latest equipment.
question
When a decision is made, what two things is a decision maker considering?
answer
The cost and benefit at the margin.
question
Define the phrase "Thinking at the Margin."
answer
The decision on whether or not to use an additional unit of something.
question
If you had a choice between playing golf or going to the movies and you chose to go to the movies, what is the opportunity cost of your decision.
answer
The opportunity cost is not playing golf.
question
What does the phrase "Choosing is Refusing" mean?
answer
It means that one faces an opportunity cost for each decision that is made and that when a choice is made between alternatives one is accepted the other is refused.
question
An underutilization of a country's resources means what?
answer
The country is inefficient in the use of its resources.
question
What is growth?
answer
The number of resources that a country has and how these resources constantly change throughout time. An outward movement of the production possibilities curve.
question
If a country uses up a good portion of its available resources what happens to its production possibilities curve?
answer
The curve moves inward.
question
What is a production possibilities frontier?
answer
The maximum amount of the combination of goods that a country can produce given its available resources and technology. It represents the different choices or trade-offs that society faces.
question
What affects does increased technology have on the production possibilities curve?
answer
It shifts to the right.
question
What does a country's production possibilities curves depend on?
answer
It depends on available resources and technology.
question
What does the law of increasing costs explain?
answer
It explains why production possibilities frontiers usually curve.
question
A point that lies outside a country's production possibilities curve means what?
answer
The Country, given its current technology and available resources cannot produce this combination of goods. Presently it is unobtainable.
question
With respect to a graph of a production possibilities curve, what does it mean to be at a point inside the production possibilities frontier?
answer
It means underutilization of resources.
question
What are some examples of heavy industry?
answer
Chemical and steel farms are examples of heavy industry.
question
What does the government control in a centrally planned economy?
answer
The government basically controls everything. They control land, labor and capital.
question
Describe three problems that occur in a centrally planned economy.
answer
Problems that occur in a centrally planned economy include; poor quality of work, shortages of non priority goods and services, diminishing production, workers lack incentive, individual freedoms are sacrificed, and most fail.
question
Where does the political and economic power lie in an authoritarian government?
answer
The political and economic power lies with the dictator or ruler in an authoritarian government.
question
Why was there a housing shortage in the former Soviet Union?
answer
There was a housing shortage in the former Soviet Union, because the government did not produce enough houses.
question
Who introduced communism to the former Soviet Union?
answer
Vladimir Lenin introduced communism to the former Soviet Union.
question
Define communism.
answer
Communism is the political system where all economic and political power rest in the hands of the central government.
question
Define socialism.
answer
Socialism is defined as a social and political philosophy that believes that democratic means should be used to evenly distribute wealth throughout society.
question
Define collective.
answer
A collective is a large Soviet farm leased from the State to groups of peasant farmers.
question
What does laissez-faire mean?
answer
Laissez-faire means that the government needs to keep their hands off the economy.
question
What is a continuum?
answer
A continuum is a range with no clear division.
question
What does privatize mean?
answer
Privatize means to sell a state-run firm to an individual.
question
Give an example of government intervention being appropriate in a free market.
answer
Some examples of appropriate government intervention in a free market are; building a bridge, building a highway, or after a natural disaster.
question
Who owns private property?
answer
Private property is owned by individuals, companies, and businesses.
question
What is an example of a country that is privatizing?
answer
An example of a country that is privatizing is China.
question
Who owns the property in a centrally planned economy?
answer
The government owns the property in a centrally planned economy.
question
Is the United Stated economy considered a centrally planned economy, a free market, or a mix market economy? Explain your answer.
answer
The United States is considered a mixed market economy. This is because the United States does have limited government regulation within the marketplace. Generally speaking, the United States follows the laissez-faire thinking within economics.
question
The terms Socialism and Communism can be used interchangeably. True or False.
answer
False.
question
Free enterprise is characterized by government ownership of capital goods with investments determined by state control. True or False.
answer
False.
question
Laissez faire is the economic doctrine developed from The Communist Manifesto. True or False.
answer
False.
question
Communism is a political system where all economic and political power rest in the hands of the central government. True or False.
answer
True.
question
Which of the following economic systems is characterized by private or corporate ownership of capital goods?
answer
Free enterprise.
question
In his book, The Wealth of Nations, Adam Smith wrote about _________ and the idea that the government should not be involved in answering the questions of production.
answer
Laissez faire
question
What do public disclosure laws do?
answer
Public disclosure laws require companies to provide full information about their products.
question
What does eminent domain mean?
answer
Eminent domain refers to the government's inability to take away an individual's property without providing just compensation.
question
Where are property rights found in the Constitution?
answer
Property rights are found in the 5th Amendment's due process and eminent domain or takings clauses.
question
What are interest groups?
answer
Interest groups are private organizations that try to persuade public officials to act or vote in a certain way.
question
Describe the concept of free contract.
answer
Free contract allows individuals to decide what agreements they want to enter when operating within a free enterprise economy.
question
What are five basic principles found in a free enterprise system?
answer
Five basic principles found in a free enterprise system are; legal equality, private property rights, free contract, voluntary exchange and competition.
question
What is profit motive?
answer
Profit motive is the force that encourages people and organizations to improve their material well-being.
question
What does open opportunity mean?
answer
Open opportunity means that everyone can compete in the marketplace.
question
Where is taxation found in the Constitution?
answer
Taxation is found in Article I of the Constitution. Although not mentioned in the lesson, it is also found in the 16th Amendment.
question
What are four things that can be looked at when promoting economic strength?
answer
Four things that can be looked at when promoting economic strength are; employment, growth, stability and citizenship.
question
What is a business cycle?
answer
A business cycle is a period of macroeconomic expansion followed by a period of contraction.
question
What does GDP stand for?
answer
GDP stands for Gross Domestic Product.
question
Define microeconomics.
answer
Microeconomics is the study of the behavior and decision making of small units such as families, individuals, or businesses.
question
Explain growth.
answer
Growth means each generation is going to have a greater standard of living.
question
Explain work ethic.
answer
Work ethic is the commitment to the value of work and purposeful activity.
question
Define macroeconomics.
answer
Macroeconomics is the study of the behavior and decision making of entire economies.
question
Why is technology beneficial in economics?
answer
Technology is beneficial in economics, because it brings with it the ability to be more efficient.
question
Explain GDP.
answer
GDP is the total value of goods and services produced in a particular economy.
question
Define welfare.
answer
Welfare is government aid to the poor.
question
Who does the government feel they have a particular responsibility to?
answer
The government feels they have a particular responsibility to the young, old, sick, poor and disabled.
question
Who was the President in office when the welfare system was created?
answer
Franklin D. Roosevelt was the President in office, when the welfare system was created.
question
When was the welfare system established?
answer
The welfare system was established in the 1930's under FDR's administration.
question
Name two examples of redistribution programs.
answer
Two examples of redistribution programs are: cash transfers, in-kind benefits, medical benefits, education and faith-based initiatives.
question
What is a cash transfer?
answer
A cash transfer is a direct payment of money to the poor.
question
What are in-kind benefits?
answer
They are things that are given free or at a greatly reduced price. An example would be food stamps.
question
What is poverty threshold?
answer
Income level below what is needed to support families or households.
question
Who sets the poverty threshold?
answer
The government sets the poverty threshold.
question
What is a lockout?
answer
A refusal to let employees work until management's demands are met.
question
What is a boycott?
answer
A mass refusal to buy products from certain employers or companies.
question
Define civilian labor force.
answer
Men and women 16 years and older who are working or are actively looking for a job.
question
What is macroeconomics?
answer
A branch of economics that deals with the economy as a whole.
question
What is a craft or trade union?
answer
An association of skilled workers who perform the same kind of work.
question
What does it mean to strike?
answer
A strike is a refusal to work until demands are met.
question
What are the two types of unions?
answer
The two types of unions are trade unions and industrial unions.
question
What are some pro-Union Legislative Acts that grew out of the Great Depression?
answer
Pro-Union Legislative Acts that grew out of the Great Depression include; Norris-LaGuardia Act 1932, Wagner Act of 1935, and Fair Labor Standards Act of 1938.
question
What happened to unemployment and wages during the Great Depression?
answer
There were large increases in unemployment and large decreases in wages.
question
Unions continue to grow stronger in the United States. True or False?
answer
False
question
What is fiat money?
answer
Money that has value because the government has ordered it is an acceptable means to pay debts.
question
What is representative money?
answer
Objects that have value because the holder can exchange them for something else of value.
question
What is money?
answer
Money is anything that serves as a medium of exchange, a unit of account and a store of value.
question
What happens to the value of money, if an unlimited supply of currency is injected into the economy?
answer
The value of money will go down.
question
What are the three uses of money?
answer
Three uses are; as a medium of exchange, a unit of account and a store of value.
question
Objects that have value because the holder can exchange them for something else of value is called:
answer
Representative money.
question
When talking about money, uniformity means:
answer
people must be able to count and measure money accurately.
question
Money that has value because the government has ordered it is an acceptable means to pay debts is:
answer
Fiat money
question
What is money that has value because the government has ordered that it is an acceptable means to pay debts?
answer
Fiat money
question
What correctly defines money as a unit of account?
answer
It provides a means for comparing the values of goods and services.
question
The six characteristics of money are; durability, portability, divisibility, uniformity, limited supply and acceptability. True or False
answer
True.
question
Why is using coins as money easier than using gold bars?
answer
Coins are more portable
question
One of the six characteristics economists use to judge how well an item serves as currency is divisibility. What does this concept mean?
answer
Money must be easily divided into smaller denominations.
question
What is the correct term for "coins and paper bills used as money?"
answer
Currency
question
What is the difference between commodity money and representative money?
answer
Commodity money consists of objects that have value in and of themselves, but representative money makes use of objects because the holder can exchange them for something else of value.
question
What were the two views of American banking before the Civil War?
answer
The Federalist viewpoint was that a strong centralized banking system was necessary to develop healthy industry and trade. The Anti-Federalist viewpoint was that a decentralized banking system where the states would establish and regulate all banks within their boundaries.
question
What is a national bank?
answer
A bank chartered or licensed by the national government.
question
What is the Gold Standard?
answer
A monetary system in which paper money and coins are equal to the value of a certain amount of gold.
question
What backed government bills and currency before the Civil War?
answer
It was backed by gold and silver.
question
What government agency insures customer deposits up to a certain amount if a bank fails?
answer
The Federal Deposit Insurance Corporation (FDIC).
question
Define the term bank run.
answer
Widespread panic in which great numbers of people try to redeem their paper money.
question
What is a bank?
answer
An institution for receiving, keeping and lending money.
question
What are greenbacks?
answer
Paper currency issued during the Civil War.
question
Penny is an artist, and John is a carpenter. Penny agrees to paint a portrait of John's family in exchange for a handmade table created by John. How did Penny and John pay for the goods in their transaction?
answer
through bartering
question
The six characteristics of money are; durability, portability, divisibility, uniformity, limited supply and acceptability. True or False?
answer
True.
question
Before the Civil War, government currency was backed by copper. True or False?
answer
False.
question
What did the Federalists believe about banking?
answer
They believed that a centralized banking system was necessary.
question
How long was the Charter for the First Bank of the United States?
answer
It was for 20 years.
question
What is commodity money?
answer
Objects that have value in themselves and that are also used as money.
question
What are bonds?
answer
Long term obligations that pay a stated rate of interest for a specific number of years.
question
What determines bond prices?
answer
The market demand and market supply of bonds.
question
What does the term tax exempt mean?
answer
The federal government does not tax the interest paid to individuals.
question
What is a 401 k Plan?
answer
A tax deferred investment and savings plan that acts as a personal pension fund for employees.
question
Define the term risk.
answer
A situation in which the outcome is not certain but probabilities for each possible outcome can be estimated.
question
Which two major companies rate and publish bond ratings.
answer
The two companies are Standard and Poor's and Moody's.
question
Define par value.
answer
Principal or total amount initially borrowed that must be repaid to the lender at maturity.
question
What are Treasury Notes?
answer
They are U.S. government obligations with maturities of two to ten years.
question
What is the largest stock exchange in the United States?
answer
The New York Stock Exchange is the largest stock exchange in the United States.
question
What are the different types of stock?
answer
They are income stock, growth stock, common stock and preferred stock.
question
Define the term stock split.
answer
The division of a single share of stock into more than one share.
question
What is speculation?
answer
The practice of making high risk investments with borrowed money in hopes of getting a big return.
question
What are equities?
answer
They are claims of ownership in a corporation.
question
What is a bear market?
answer
A steady drop in the market for stocks over time.
question
What are futures?
answer
Contracts to buy or sell on a specific date in the future at a price specified today.
question
Define the term capital gain.
answer
It is the difference between a higher selling price and a lower purchase price.
question
What is a call option?
answer
An option to buy shares of stock at a specified time in the future.
question
What is a depression as applied to the business cycle?
answer
State of economy with large numbers of people who are out of work, has acute shortages and an excess capacity on manufacturing plants.
question
What are business cycles?
answer
Business cycles are the largely systematic ups and downs of real GDP.
question
List the phases of the business cycle.
answer
They are recession, trough, expansion, and peak.
question
List the five causes of the business cycle.
answer
They are capital expenditure, inventory adjustments, innovation and imitation, monetary factors and external shocks.
question
What is the econometric model?
answer
A macroeconomic model that uses algebraic equations to describe how the economy behaves.
question
Define the term recession.
answer
Period in which real GDP declines for two consecutive quarters.
question
What is the equation for the output expenditure model?
answer
The equation is; GDP = C + I + G + (x - m).
question
A decline in the real GDP that occurs for at least two or more quarters is called a _______.
answer
Recession.
question
What are business fluctuations?
answer
The rise and fall of real GDP over time in a non-systematic manner.
question
List one reason as to why historical growth has slowed in recent years.
answer
Smaller family units is one reason that historical growth has slowed in recent years.
question
What three factors affect Population Growth?
answer
The three factors that affect Population Growth are; fertility, life expectancy, and net immigration.
question
How often is the American Census taken?
answer
Our Census is taken every ten years.
question
What is a Census?
answer
A Census is a counting of our population.
question
Define baby boom.
answer
The baby boom was the high concentrated birth rates from 1946 to 1964.
question
Who are demographers?
answer
Demographers are people who study growth, density and other characteristics of population.
question
The counting of the population is broken into what two categories?
answer
It is broken into urban population and rural population.
question
What is a population pyramid?
answer
A population pyramid is a type of bar/graph that shows the breakdown of population by age and gender.
question
Since the 1970's regional change the growth of the population has moved where?
answer
Since the 1970's people have moved to the West and South.
question
What makes up the Public Sector?
answer
The federal government, state governments and local governments make up the public sector.
question
What sector of the economy do private individuals and private businesses make up?
answer
They make up the private sector.
question
Define transfer payment.
answer
A payment for which the government receives neither goods nor services in return.
question
What does Per Capita mean?
answer
Per Capita means per person.
question
Define distribution of income.
answer
The way in which income is allocated among families, individuals, or other designated groups in the economy.
question
What are the two types of government spending?
answer
The two types of government spending are goods and services and transfer payments.
question
What is a grant-in-aid?
answer
A grant-in-aid is a transfer payment one level of government makes to another level of government.
question
Give an example of an impact of government spending.
answer
Government spending affects resource allocation. It also affects the redistribution of income.
question
Who does the government compete with when they produce goods and services?
answer
The government competes with the private sector when they produce goods and services.
question
Payments to individuals or industries to encourage or discourage certain activities are called _______.
answer
subsidies and incentives.
question
Do all States approve spending the same way?
answer
No, each individual State can approve spending the way it wants to.
question
What is the largest category of spending by local governments?
answer
The largest category of spending by local governments is elementary and secondary education.
question
Give an example of a State intergovernmental expenditure.
answer
An example would be a State giving funds to a local municipality for highway repairs.
question
Define intergovernmental expenditures.
answer
These are funds that one level of government transfers to another level for spending.
question
If a State has a balanced budget amendment and expenditures exceed revenues, what must the State do?
answer
The State must reduce expenditures to match the level of revenue.
question
What is a balanced budget amendment?
answer
A State constitutional amendment that requires annual spending not exceed revenues.
question
What is the largest category of State expenditures?
answer
The largest category of State expenditures are intergovernmental expenditures.
question
List three of the largest categories of local government expenditures.
answer
The largest categories include; elementary and secondary education, utilities, hospitals, police protection, interest on debt, public welfare and highways.
question
How long is a fiscal year?
answer
A fiscal year is twelve months.
question
Define Federal Budget.
answer
It is a plan for the federal government's revenue and spending for the coming year.
question
What are two ways in which government fiscal policy can stimulate income and employment?
answer
Government fiscal policy can stimulate income and employment by reducing taxes and increasing government expenditures.
question
What are the limits of fiscal policy?
answer
The limits of fiscal policy include; difficulty of changing spending levels, predicting the future, delayed results, political pressures, and coordinating fiscal policy.
question
What type of policy is the government undertaking when they raise taxes and.or reduce federal expenditures?
answer
The government is undertaking a contractionary policy.
question
What can the Federal government do to induce a contractionary fiscal policy?
answer
The Federal government could increase taxes and reduce government expenditures.
question
What does an expansionary fiscal policy normally do to economic growth?
answer
It increases economic growth.
question
What agency is responsible for managing the Federal Budget?
answer
The Office of Management and Budget (OMB) is responsible for managing the Federal Budget.
question
What are expansionary policies?
answer
They are fiscal policies, such as higher spending and tax cuts, that encourage economic growth.
question
Who is responsible for monitoring the reserves of State Member Banks?
answer
The Federal Reserve is responsible for the monitoring.
question
How many Federal Reserve District Banks are there?
answer
There are twelve Federal Reserve District Banks.
question
What are bank holding companies?
answer
They are corporations that own more than one bank.
question
Who owns the Federal Reserve?
answer
Member banks own the Federal Reserve.
question
What is Regulation Z?
answer
It is a provision extending truth in lending disclosures to consumers.
question
The Federal Reserve System's main responsibility is to safeguard the proper functioning of our money system. It is the _______ of our money supply, our interest rates, and the economy's price level.
answer
watchdog
question
How long do members of the Board of Governors serve?
answer
They serve a fourteen year term.
question
The nucleus of the Federal Reserve System is its Board of Governors, which meets in Washington, D.C. The Board consists of _______ members, appointed by the President and confirmed by the Senate. Each serves a 14-year term.
answer
seven
question
What is the Federal Open Market Committee?
answer
It is the committee that makes decisions about the growth of the money supply and the level of interest rates.
question
How many members are on the Board of Governors and who appoints them?
answer
There are seven members and they are appointed by the President.
question
The Federal Reserve System is supervised by a Board of Governors whose members are appointed by the president for life. True or False?
answer
False.
question
The Fed regulates banks but has little authority over bank holding companies. True or False?
answer
False.
question
Under Regulation Z, the Fed can extend truth-in-lending disclosures to benefit millions of individuals when they borrow money or make purchases. True or False?
answer
True.
question
Regulation Z regulates the Federal Reserve. True or False?
answer
False.
question
The Fed's Federal Open Market Committee _____.
answer
is the Fed's primary monetary policymaking body.
question
The Federal Reserve
answer
is made up of 12 district banks and 25 branch banks.
question
Before signing the loan to purchase her new car, Veronica read over the terms of her loan. She wanted to learn about the annual percentage rate and the total cost to her, the borrower. This is an example of which Federal Reserve service in action?
answer
Truth in Lending Act.
question
The Fed's structure is simple. It consists of _______ District Federal Reserve Banks, each serving a region of the country.
answer
twelve.
question
Why do economists differ regarding their views on fiscal and monetary policy?
answer
They differ due to different criteria and different eras.
question
What is the Council of Economic Advisers?
answer
It is a three member group that reports on economic developments and proposes strategies. They advise the President.
question
What are structural fiscal policies?
answer
They are policies designed to go ahead and strengthen the economy in the long run, but not designed o deal with short run problems.
question
Give one reason, why, today, there is a decline in the use of discretionary fiscal policy.
answer
Reasons why, today, there is a decline in the use of discretionary fiscal policy include; recognition lag, implementation lag, and the relative short durations of recessions.
question
The dispute among economists about how monetary policy should be measured reflects a division on how they view _______.
answer
the economy.
question
What are two examples of automatic stabilizers?
answer
Two examples are; unemployment insurance, and progressive individual income tax rate.
question
What is a recognition lag?
answer
It is the time between the beginning of a recession or a period of inflation and the awareness of it actually happening.
question
What is an implementation lag?
answer
It is the amount of time it takes to do something once the problem has been identified.
question
Explain how monetary policy could conflict with fiscal policy in trying to resolve stagflation.
answer
Monetary policy could decide to attack inflation by reducing the money supply, while fiscal policy could decide to attack a stagnating economy by increasing government expenditures.
question
Given today's economy, where discretionary fiscal policy is declining and where monetary policy is dominating, what can be said about potential conflicts between the two policies?
answer
There will be less conflicts or clashes.
question
Initially, when a country move from Communism to Capitalism, what is likely to occur with employment and production?
answer
Typically more unemployment and a reduction in production will occur.
question
What indications are there that China is becoming more capitalistic?
answer
China is privatizing most of its industry and is introducing market reform.
question
What is solidarity?
answer
It is an independent Polish labor union founded in 1980 by Lech Walesa.
question
Why do people have difficulty responding to new incentives when a country transitions from Communism to Capitalism?
answer
The people are not use to making decisions since the State has always been making the decisions for them.
question
Name two countries or regions that are making the transition from Communism to Capitalism.
answer
Countries or regions that are making the transition from Communism to Capitalism include; Soviet Union, and Eastern Europe.
question
List at least two problems associated with the transition from communism to capitalism.
answer
Problems associated with the transition from communism to capitalism include; privatization, loss of political power, discipline of capitalism, and responding to new incentives.
question
What is a black market?
answer
A market in which economic products are sold illegally.
question
What is privatization?
answer
Conversion of state owned factories and other property to private ownership.
question
What was the Great Leap Forward?
answer
This was China's disastrous second five-year plan, it began in 1958 and forced collectivization of agriculture and rapid industrialization.
question
The World Bank, the United Nations Development Program, and the International Monetary Fund
answer
provide development assistance to less developed countries.
question
Internal financing is derived from foreign nations. True or False?
answer
False.
question
Financing derived from the savings of a country's citizens is called:
answer
internal financing
question
A true statement about the World Bank would be that it
answer
raises money on the financial markets and from member nations.
question
Why are foreign investors attracted to less-developed countries in their search for increased profits?
answer
They can take advantage of the natural resources available and the large, inexpensive labor force.
question
Suppose a less developed country is having difficulty making payments on its foreign debts. What option does this nation have?
answer
It may ask its lenders for debt rescheduling in exchange for accepting a stabilization program from the International Monetary Fund.
question
The largest provider of development assistance is
answer
the World Bank.
question
An example of foreign direct investment would be
answer
a factory that is built in an LDC but owned by a foreign company.
question
Aside from humanitarian concerns, which of the following is one reason a nation is motivated to provide foreign aid to a less-developed country?
answer
Foreign aid can increase a nation's market for its own goods.
question
What organization offers a stabilization program in which the debtor nation agrees to revise its economic policy?
answer
International Monetary Fund
