Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that
a. foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding.
b. foreign competition may cause unemployment in import-competing industries, but the increase in consumer surplus due to free trade is more valuable than the lost jobs.
c. the critics are correct, so countries must protect their industries with tariffs or quotas.
d. foreign competition may cause unemployment in import-competing industries, but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs.
a
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A key element of real business cycle theory is that
a. labor supply is not responsive to changes in real wages. b. labor supply is highly elastic. c. as the wage increases, workers are richer and work less. d. none of the above.
A tax credit
A. is not the same as a tax deduction. B. is another phrase for a tax deduction. C. is never calculated on federal tax returns. D. only applies to the EITC.
A grocery store sells soup for $1.50 a can, or $2.50 for two cans. To a customer, the marginal cost of buying the second can of soup is
a. $1. b. $1.25. c. $1.50. d. $2.50.
In the United States during the period from 1870 to 1940, the price level was most likely to
a. fluctuate. b. increase. c. decrease. d. trend generally upward.