The open economy effect refers to the fact that
A. the slope of the aggregate demand curve is partially explained by the reduction in the desire to buy fewer U.S. goods by U.S. residents and foreign residents as a result of a higher price level.
B. the position and shape of the long run aggregate supply curve is partially due to the fact that we import goods.
C. the aggregate supply curve shifts when the economy grows.
D. the immigration policies of the United States are disruptive to labor markets.
Answer: A
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In order to isolate the substitution effect of a price increase, a consumer
a. must be given a lower price on the other good so that he can achieve his original indifference curve. b. must be given enough of the other good so that his consumption of that good is not influenced. c. must be given enough additional income to allow him to achieve his original indifference curve. d. must be given enough additional income to allow him to purchase the original quantity of the good.
Mercantilism
A) is the philosophy of free international trade. B) was a system of export promotion and barriers to imports practiced by governments, especially in the 17th and 18th centuries. C) was praised by Adam Smith in The Wealth of Nations. D) Both A and C.
Models should:
A. attempt to include every detail of the situation being studied. B. attempt to describe a situation with perfect accuracy. C. not be applied to microeconomics. D. describe a real life situation accurately.
Public choice theory suggests politicians will be most likely to favor redistribution of income from
a. the rich to the poor. b. unorganized taxpayers to well-organized interest groups. c. middle-income taxpayers to both the rich and the poor. d. well-organized businesses and labor groups to consumers.