1. Suppose that cars are an external economies of scale good. Imagine that the US has an initial (head start) advantage in car production. Mexico has not produced any cars, but is considering entering the car industry. Despite the US’s initial advantage in car production, Mexico is able to enter car production and eventually becomes the world’s only producer of cars. Draw a diagram with a forward falling supply curve for each country (and any other curves you may need) that illustrates this scenario, and briefly explain using words.

Working capital: Mukhopadhya Network Associates has a current ratio of 1.60, where the current ratio is defined as follows: Current ratio = Current assets/Current liabilities. The firm's current assets are equal to $1,233,265, its accounts payables are $419,357, and its notes payables are $351,663. Its inventory is currently at $721,599. The company plans to raise funds in the short-term debt market and invest the entire amount in additional inventory. How much can note payable increase without the current ratio falling below 1.50?

Use your knowledge of decision-making and problem solving to select the term that best completes the sentence.

Many were made after a tornado devastated the small town with little warning.

Use your knowledge of decision-making and problem solving to determine which term best represents the given example.

Redistribution of wealth, through tax and spending policies that aim to reduce economic inequalities.

: True False

Explain how deficit spending could be a burden to future generations. (Three reasons) Chapter 14

23. Describe the interaction between the multiplier and accelerator following an increase in government spending.（30 marks）

1. Briefly explain why portfolios need to be sorted on lagged Research Spending to test return predictability.

Does the “spending multiplier effect” make fiscal policy more effective, or less? Explain briefly.

2. Graphically illustrate and explain how an increase in the interest rate would affect consumer spending.