The United States began to pull out of a recession in the spring of 1991. Unemployment fell, but inflation did not increase. What was the most likely cause of this?
A. Aggregate demand was increasing at a faster rate than aggregate supply.
B. Both aggregate demand and aggregate supply were decreasing.
C. Aggregate supply was increasing at a faster rate than aggregate demand.
D. Aggregate demand was increasing but aggregate supply was decreasing.
Answer: C
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A major difficulty with the infant industry argument for protection is that
A) government revenue will fall with a tariff. B) it requires the nation to fall into the large country case for tariff protection. C) effective rates of protection are usually greater than nominal rates. D) the measurement of production externalities is hard and uncertain. E) the productivity of infant industries is usually declining.
Which of the following is NOT likely to affect investment?
A) variations in expected output B) the nominal interest rate C) the real interest rate D) the tax treatment of depreciation allowances
If the British pound depreciates against the U.S. dollar,
A) British businesses gain by an increase in the dollar price of exports to the United States. B) British consumers gain by a decrease in the pound price of U.S. exports to Britain. C) British consumers lose by an increase in the pound price of U.S. exports Britain. D) U.S. consumers lose by an increase in the dollar price of British exports to the United States.
Suppose that a market has the following supply and demand equations:
Demand: QD = 380 - 10p Supply: QS = 80 + 5p If the government imposes a specific tax of ? on suppliers, what will be the price buyers pay and sellers receive, quantity, and government revenue from the tax (as functions of ?). What tax level maximizes the revenue the government collects from the tax?