How does a tariff affect the consumer surplus and the producer surplus from the imported good? Is the overall economy helped or harmed by tariffs? Briefly explain your answers
What will be an ideal response?
A tariff raises the price of the good so that domestic consumption decreases and domestic production increases. As a result, domestic consumer surplus decreases and domestic producer surplus increases. The overall economy is harmed. The decrease in consumer surplus is larger than the increase in producer surplus so a deadweight loss is created.
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An economic model is useful only if it:
a. contains no positive statements. b. captures all the complexities of reality. c. yields accurate predictions. d. has both macro- and microeconomic applications.
. An example of a nonrenewable resource would be:
A. trees. B. rivers. C. an oil deposit. D. All of these are examples of nonrenewable resources.
When real GDP is falling, the economy is experiencing
a. a recession. b. a financial crisis. c. an expansion. d. equilibrium. e. environmental deterioration.
An increase in the real risk-free interest rate causes the:
a. Preferred asset ratio for currency in circulation (C/D) to fall, which decreases the quantity of real loanable funds supplied. b. Preferred asset ratio for customary reserves (U/D) to fall, which increases the quantity of real loanable funds supplied. c. Preferred asset ratio for near money (N/D) to fall, which decreases the quantity of real loanable funds supplied. e. None of the above.