After trade opens, the short run impact on the income of the variable factor will be
A) a decrease.
B) an increase.
C) zero.
D) indeterminate, depending on the consumption pattern of the owners of the variable factor.
D
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Answer the following statement(s) true (T) or false (F)
1. A drafted army can be unnecessarily costly in two ways: it can be the wrong size or it can consist of the wrong people. 2. A draft is better for society because it is less costly than a volunteer army. 3. The Fabian argument that confiscation of rents would not lower social welfare overlooks the costs of resource misallocation. 4. The use of signals in an economy is both individually rational and socially efficient. 5. Because of adverse selection, no good used cars ever change hands.
In the prisoner's dilemma setting for stealing and producing, both participants end up __________, which turns out to be ________________________ stolen. The government _________ make both participants better off by changing the payoff matrix.
A. stealing; better for them than if they had both not; can B. stealing; worse for them than if they had both not; can C. not stealing; better for them than if they had both; cannot D. not stealing; worse for them than if they had both; cannot
Crowding out is a reduction in private investment caused by government budget deficits, and may partially offset the expansionary effects of fiscal policy. The exact degree of crowding out depends on all of the following except
A) how much of the deficit is financed by households, firms, and governments outside of the United States. B) how much real interest rates increase. C) the level of the marginal corporate income tax rate. D) the sensitivity of investment to the real interest rate.
Menu costs will:
A. Increase the amount of training of workers B. Result in price wars between businesses C. Increase the legal minimum wage D. Make prices inflexible downward