With graph on interest rate and planned investment (downward sloping): Planned investment could increase from $8 million to $12 million if
A) the government increases government purchases.
B) the government decreases net taxes.
C) the Fed sells bonds in the open market.
D) the Fed reduces the required reserve ratio.
Answer: D) the Fed reduces the required reserve ratio.
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What is meant by the phrase, "There is no such thing as a free lunch"?
What will be an ideal response?
If the government desires to raise a certain amount of revenue by taxing a monopoly, an ad valorem tax will
A) generate the same loss of consumer surplus as a specific tax. B) generate a greater loss of consumer surplus than a specific tax. C) generate a smaller loss of consumer surplus than a specific tax. D) generate no loss of consumer surplus.
International trade can be mutually advantageous because it
a. encourages the adoption of sound institutions and policies. b. reduces the competitiveness of domestic industries and, thereby, makes it easier for the domestic producers to raise their prices. c. permits the trading partners to take advantage of reductions in per-unit costs in industries where economies of scale are important. d. does all of the above. e. does both a and c.
Lobbying actions that seek government legislation to provide tax breaks to specific corporations would be an example of:
A. How the median-voter model works B. How political choices are bundled C. Rent-seeking behavior D. The paradox of voting