Explain how tariff revenue can be considered an element of the importing country's national gain or loss from imposing a tariff.
What will be an ideal response?
POSSIBLE RESPONSE: The transfer of consumer surplus from consumers to producers and the deadweight loss to the nation as a whole are not the only effects on the importing country. As long as it is not so high as to completely prohibit all imports, a tariff is a source of revenue to the imposing country's government. This revenue equals the unit amount of the tariff times the volume of imports with the tariff. The government could use the tariff revenue to the benefit of the country. For instance, the country's government could use the tariff revenue to increase government spending on socially worthwhile projects that benefit the country as a whole. The tariff revenue could also be used to reduce some other tax, such as the personal income tax. The increased government revenue to the country should be considered along with the consumer losses and producer gains from the tariff.
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Refer to the scenario above. Using 2012 as the base year, what is the real GDP of the economy in 2012?
A) $57,500 B) $75,000 C) $45,000 D) $55,000
Keynes believed that if the government increased spending and reduced taxes during an economic slump, then it would ________.
A. only further damage the economy. B. have no impact on the economy. C. hurt future generations. D. help the economy recover more quickly.
The discount rate represents the interest rate on
A) overnight loans between banks. B) three-month U.S. securities. C) municipal bonds. D) one-year discount bonds. E) none of the above
The result of the calculation of the price elasticity of demand is
A. always negative. B. always positive. C. always greater than one. D. sometimes positive, sometimes negative.