Some people argue that protection discourages dependency. Explain this argument
What will be an ideal response?
The argument is that small or developing countries may come to rely too heavily on one or more trading partners for many items. Doing something may make it difficult for the smaller nation to remain politically neutral. Some even argue that superpowers consciously engage in trade with smaller countries to create these dependencies.
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
The equilibrium quantity of a good will increase and its equilibrium price might rise, fall, or stay the same when
A) its demand and supply both increase. B) its demand increases and supply decreases. C) its demand decreases and supply increases. D) its demand and supply both decrease.
An decrease in taxes shifts aggregate demand
a. to the right. The larger the multiplier is, the farther it shifts. b. to the right. The larger the multiplier is, the less it shifts. c. to the left. The larger the multiplier is, the farther it shifts. d. to the left. The larger the multiplier is, the less it shifts.
A decrease in price will lead to an increase in demand.
a. true b. false