Explain why a government would impose an import tariff when domestic consumers suffer more than producers gain
What will be an ideal response?
The tariff may be a product of producer rent seeking. Each producer will gain a relatively large amount compared to the loss of each consumer. The producers may be able to coordinate their rent seeking activities. Each consumer will only lose a relatively small amount so it is unlikely that consumers will coordinate a protest to the tariff.
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
At low levels of employment, the Keynesian aggregate supply curve
a. is downward sloping b. is upward sloping c. is vertical d. is horizontal e. is zero
The Board of Governors has ___ members, and they are appointed for ___ year terms.
A. 10; 12 B. 7; 14 C. 14; 7 D. 12; 10
If a firm wants to increase revenue, it should increase the selling price of its product if it is currently producing in the ________ portion of its demand curve.
A. perfectly elastic B. unit elastic C. elastic D. inelastic