An "Open" Economy Is One in Which

question 138

Multiple Choice

An "open" economy is one in which:

• A) the level of output is fixed.
• B) government spending exceeds revenues.
• C) the national interest rate equals the world interest rate.
• D) there is trade in goods and services with the rest of the world.

Understand the concept of Net Present Value (NPV) and its application in investment decisions.

Analyze the feasibility of investments using NPV and cost of capital.

Determine the factors influencing the choice between different technologies or business strategies based on costs.

Understand short-run and long-run decision-making processes for operational and investment purposes.

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Definitions:

Midpoint Method

A technique used in economics to calculate elasticity by averaging the percentages of change in both quantity and price.

Price Elasticity

A gauge for assessing how the demand or supply levels of an item react to price alterations.

Income Elasticity

A measure of how much the demand for a good or service changes in response to a change in income.

Inferior Good

A good for which a rise in income decreases the demand for the good.