A possible reason a nation might impose a protectionist policy such as a tariff is to:
A. help domestic firms establish a world monopoly in a particular market.
B. increase the level of imports.
C. encourage specialization in the good in which the nation has a comparative advantage.
D. increase the welfare of domestic consumers.
Answer: A
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The demand for food is most elastic in countries
A) with low income levels. B) with intermediate income levels. C) with high income levels. D) that are highly urbanized.
Under ERM 2 rules, the national central bank of an EU member with its own currency can suspend euro intervention operations
A) if there is a civil war. B) if they result in money supply changes that threaten to destabilize the domestic price level. C) if there is a current account deficit. D) if there is a current account surplus. E) if they result in a weakened current account.
Use the above figure. Suppose that a regulatory agency requires this natural monopolist to engage in marginal cost pricing. This would lead to
A) losses, which would drive the monopolist out of business in the long run. B) profits, which would encourage new producers to enter the industry in the long run. C) profits, but new firms cannot enter the industry in the long run due to high barriers to entry. D) losses, which would encourage the monopolist to lower costs in the long run.
If the Fed paid a higher interest rate to banks on their reserves at the Fed, excess reserves in the banking system would tend to fall
a. True b. False Indicate whether the statement is true or false