The Interstate Commerce Commission (ICC) regulates railroads, barges and trucks. Suppose technical change lowers the costs of railroads. As a result, the ICC permits railroads to lower prices some but also alters the rates of barges and trucks so they get additional business. The ICC would be acting consistently with
A. the public interest theory of regulation.
B. the share-the-gains, share-the-pains theory of regulation.
C. the capture hypothesis of regulation.
D. None of the theories presented in the text since economic regulation is specific to a single industry and not to agencies that cover more than one industry. That is the province of social regulation.
Answer: B
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Putting quarters into a Las Vegas slot machine and receiving quarters out of that machine is analogous to the circular flow model because
a. the value of the resources flowing into firms is precisely the value of the goods and services flowing out of firms b. the value of the components of national income flowing into the firms is precisely the value of consumption and investment flowing out of the firms c. the absolute dollar amount of the production goods going out from the firms equals the absolute dollar amount of the consumption goods that households consume d. households gamble e. you can then substitute the casino economy for the get-rich-quick schemes that are all too prevalent in the economy today
Which of the following is most likely beyond the scope of economic analysis?
a. Family structure. b. Why some people contribute to charities. c. Why some people choose to vote. d. The actions of people who do what voices in their heads tell them to do.
In IS-LM-FE analysis, expansionary monetary policy
A. lowers levels of gross domestic product (GDP). B. shifts the LM curve to the left. C. leads to higher interest rates. D. leads to lower interest rates.
When the supply of Swiss cheese decreases while the demand for Swiss cheese increases, the equilibrium ________ of Swiss cheese will definitely ________, ceteris paribus.
A. price; increase B. price; decrease C. quantity; increase D. quantity; decrease