If a quota is imposed on the import of a good that has a lower price in the domestic market than in the world market, a surplus occurs in the market for the good
a. True
b. False
Indicate whether the statement is true or false
False
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Suppose the local electrical utility, a legal monopoly based on economies of scale, was split into four firms of equal size, with the idea that eliminating the monopoly would promote competitive pricing of electricity. What do you anticipate would happen to prices?
A. The government would impose barriers to entry that protect prices
B. More competition would lead to lower prices
C. There would likely be no change in prices.
D. They would each have to raise prices to cover their higher costs.
Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and net nonreserve international borrowing/lending balancein the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete
equilibrium. a. The GDP Price Index remains the same and net nonreserve international borrowing/lending balance becomes more negative (or less positive). b. The GDP Price Index rises and net nonreserve international borrowing/lending balance becomes more negative (or less positive). c. The GDP Price Index falls and net nonreserve international borrowing/lending balance becomes more positive (or less negative). d. The GDP Price Index and net nonreserve international borrowing/lending balanceremain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
The principal reason why the chain-weighted index for GDP and the CPI both overstate actual changes in prices is that:
A. it is hard to measure quality changes. B. the basket of goods purchased by consumers never changes. C. price data is often inaccurate. D. All of these
Even though price elasticity of demand is always ________, by convention its absolute value is always discussed as a ________.
A. negative; positive number B. a fraction; whole number C. negative; prime number D. positive; negative number