Question

according to the text, which three characteristics are important to consider when determining the long-run economic benefits of doing business in another country? (check all that apply.)

Answer 1

purchasing power, size of the market, and spending power of the consumers.

Step-by-step explanation

1. Purchasing power is defined as the ability of a unit of currency to buy goods or services. it can affect every aspect of the economy, from buying goods to buying stocks. when a country is hit by inflation it can cause severe consequences for instance increase in prices, an increase in interest rate, and ultimately results in higher costs of living. Example: At the beginning of the 20th century the average housing price in the U.S. was $126,000 and today it is as high as $259.000 and this is due to both inflation and a rise in demand.
2. Size of market : Markets play a key role in price formulation and liquidity transformation. the size of the market can represent the estimated demand for the products in the market. it is also an indicator of the entry of new businesses.
3. The spending power of consumers: the ability of the customers to spend more can result in an expansion of economy. the rise in the spending power of consumers would result in increasing demands which can help in the growth of the economy.