A nationwide system of marketable pollution permits will reduce pollution overall, but might increase pollution in some high abatement cost areas.
Answer the following statement true (T) or false (F)
True
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Suppose the required reserve ratio is 5 percent and the Fed buys a $10,000 bond. If money is deposited into a commercial bank, what will initially happen to money supply?
a. It will increase by $10,000. b. It will increase by $5,000. c. It will increase by 5 percent. d. It will increase by $200,000.
If the government purchases multiplier is 4 and a change in government spending leads to a $500 million decrease in aggregate demand, we can conclude that
A. Government spending decreased by $125 million. B. Taxes increased by $500 million. C. Government spending decreased by $100 million. D. Taxes decreased by $100 million.
The infant industry argument for tariffs against free trade is sometimes supported because:
A) it is very hard to discern which industries really deserve protection. B) subsidies may have more merit than tariffs. C) the "infant" may "still wear diapers" even after it attains a huge size and economies of scale. D) a new domestic industry may have potential economies of scale.
JoAnn considers cola and plain sparkling water to be good substitutes. Suppose the price of sugar, a key ingredient used to produce cola, falls. According to the substitution effect, which of the following is most likely to occur?
A. JoAnn will purchase less cola and more sparkling water. B. JoAnn will purchase more cola and less sparkling water. C. JoAnn will purchase more of all goods due to her higher real income. D. JoAnn's demand curve will decrease (shift in), causing her to purchase less cola.