If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 5, potential output (Y*) equals 11,000, then government purchases must ________ to eliminate any output gap.
A. increase by 200
B. increase by 1,000
C. decrease by 200
D. increase by 5,000
Answer: A
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If there is no Ricardo-Barro effect, an increase in the government budget deficit
A) lowers the equilibrium real interest rate. B) decreases the demand for loanable funds. C) increases the supply of loanable funds. D) decreases the supply of loanable funds. E) raises the equilibrium real interest rate.
Refer to Figure 9-9. Fenwick currently both produces and imports pistachios. The government of Fenwick decides to restrict international trade in pistachios by imposing a quota that allows imports of only 5 million pounds each year
Figure 9-9 shows the estimated demand and supply curves for pistachios in Fenwick and the results of imposing the quota. Answer questions a-j using the figure. a. If there is no quota what is the domestic price of pistachios and what is the quantity of pistachios demanded by consumers? b. If there is no quota how many pounds of pistachios would domestic producers supply and what quantity would be imported? c. If there is no quota what is the dollar value of consumer surplus? d. If there is no quota what is the dollar value of producer surplus received by producers in Fenwick? e. If there is no quota what is the revenue received by foreign producers who supply pistachios to Fenwick? f. With a quota in place what is the price that consumers of Fenwick must now pay and what is the quantity demanded? g. With a quota in place what is the dollar value of consumer surplus? Are consumers better off? h. With a quota in place what is the dollar value of producer surplus received by producers in Fenwick? Are domestic producers better off? i. Calculate the revenue to foreign producers who are granted permission to sell in Fenwick after the imposition of the quota. j. Calculate the deadweight loss as a result of the quota.
An increase in lifetime wealth
A) increase current labor supply and increase current consumption demand. B) increase current labor supply and decrease current consumption demand. C) decrease current labor supply and increase current consumption demand. D) decrease current labor supply and decrease current consumption demand.
What is economic profit?
What will be an ideal response?