Economists believe the most persuasive argument for protectionism is to protect infant industries. But the argument has a drawback. What is this drawback?
A) Governments are usually too impatient and do not allow protection to remain in place long enough to allow industries to be competitive in international markets.
B) Protection lessens the need for firms to become productive enough to compete with foreign firms; this often results in infant industries never "growing up."
C) Governments usually use tariffs, rather than quotas, to protect infant industries in order to collect tariff revenue. (Quotas do not result in government revenue).
D) Governments always make the level of protection for infant industries too high.
B
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When the interest rate is considered higher than normal, the speculative demand for money ________, the transaction demand ________
A) increases; decreases B) decreases; increases C) remains the same; decreases D) first increases then decreases; remains the same
Explain the differences between expansionary and contractionary fiscal policies, and list the typical actions that are used for expansionary and contractionary fiscal policies
What will be an ideal response?
A point inside a nation's production possibilities curve can represent:
a. a recession. b. an increase in population size. c. an economic growth. d. a technological advancement. e. an improvement in living standards.
If the economy is operating in the intermediate range of the aggregate supply curve, then the greater the rate of growth of aggregate demand the:
A. Greater the resulting increase in the price level, the greater the rate of growth of output, and the greater the unemployment rate B. Greater the resulting increase in the price level, the lower the rate of growth of output, and the greater the unemployment rate C. Less the resulting increase in the price level, the lower the rate of growth of output, and the greater the unemployment rate D. Greater the resulting increase in the price level, the greater the rate of growth of output, and the lower the unemployment rate