The convergence theory is based on the idea of:
A. increasing rates of income per capita.
B. decreasing income per capita.
C. increasing opportunity costs.
D. decreasing marginal returns.
Answer: D
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Economists believe the most persuasive argument for protectionism is to protect infant industries. But the argument has a drawback. What is this drawback?
A) Governments are usually too impatient and do not allow protection to remain in place long enough to allow industries to be competitive in international markets. B) Protection lessens the need for firms to become productive enough to compete with foreign firms; this often results in infant industries never "growing up." C) Governments usually use tariffs, rather than quotas, to protect infant industries in order to collect tariff revenue. (Quotas do not result in government revenue). D) Governments always make the level of protection for infant industries too high.
One reason why firms would choose a salary system rather than a commission compensation system is that their employees might become less concerned about the quality of their work
Indicate whether the statement is true or false
A sales tax is
A) a tax assessed on personal income. B) a tax assessed on the prices paid for numerous goods and services. C) a tax assessed on a public good. D) the total tax base.
Under a flexible exchange rate system, which of the following will be most likely to cause a depreciation in the exchange rate value of the dollar (relative to the English pound)?
a. An economic boom occurs in England, inducing English consumers to buy more American-made automobiles, trucks, and computer products. b. Real interest rates in the United States fall lower than real interest rates in England. c. Restrictive monetary policy in the United States causes inflation to be lower than in England. d. Attractive investment opportunities in the United States induce English investors to buy stock in U.S. firms.