Which of the Following Assumptions Is Common to Both New

question 11

Multiple Choice

Which of the following assumptions is common to both New Trade Theory and the model of intra-industry trade?

• A) trade is a zero-sum game
• B) production exhibits increasing returns to scale
• C) firms behave cooperatively rather than competitively
• D) exchange rates adjust to offset the effects of tariffs
• E) in the long run, exports equal imports

Understand the general principles of measuring credit capacity.

Identify what creditors evaluate during a credit application process.

Know strategies to protect against credit card fraud.

Compare alternatives in financing current purchases and their trade-offs.

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Definitions:

Explicit Interest

The stated interest rate on a loan or financial instrument, not including the effects of compounding or any hidden charges.

Factoring

Financing method where a firm sells its accounts receivables, usually to a specialized financing company, at a discount to their full value.

Receivables

Payments due from clients to a business for the delivery of goods or services that have not yet been compensated.

Collateral

An asset or property that a borrower offers to a lender as security for a loan, which the lender can seize if the borrower fails to make required payments.