Suppose That Because of Legal and Financial Reforms in the Country

question 77

Multiple Choice

Suppose that because of legal and financial reforms in the country of Belats, foreigners find business opportunities there more attractive. We would expect the more attractive opportunities would cause Belats'

• A)net exports and net capital outflows to increase.
• B)net exports to increase and its net capital outflows to decrease.
• C)net exports and net capital outflow to decrease.
• D)net exports to decrease and its net capital outflow to increase.

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Definitions:

Monopolistically Competitive

A business environment defined by numerous companies offering products that are alike but not exactly the same, providing them with a certain level of influence over the market.

Pure Monopolist

A market scenario where a single firm is the sole provider of a product or service, without any close substitutes, giving the firm significant market power to influence prices.

Elastic

Describes a situation in which the demand for a product is sensitive to price changes.

Excess Capacity

Plant resources that are underused when imperfectly competitive firms produce less output than that associated with achieving minimum average total cost.