Which of the following statements is correct?
A. In a first-best world, imports would not cause import-competing firms to go out of business and workers in these industries to lose their jobs.
B. In a first-best world, if rising import competition is driving domestic producers out of business, the government must intervene to protect the domestic firms.
C. The most efficient policy to maintain production in import-competing industries is to impose barriers on imports.
D. If we want to help workers who lose jobs when a domestic industry shrinks, the specificity rule suggests that the government should provide subsidies to those workers to retrain or to relocate to areas where jobs are available.
Answer: D
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According to the analysis in your text, the school voucher program would
A. increase the quality of education, but not improve the welfare of low income families. B. decrease the quality of education. C. increase the quality of education. D. not affect education quality, but would make lower income families better off.
Which of the following statements reflect the primary change in the mortgage market that played the major role in creating the housing crises in 2007 through 2009?
A. low interest in the mid 2000's. B. adjustable rate mortgages to low income citizens with low credit scores. C. the large increase in interest rates in 2007. D. the reduction in newly constructed housing.
According to the Taylor rule, when real GDP is equal to potential GDP, and the inflation rate is equal to its target rate of two percent, the Federal funds rate should be:
A. 2 percent and this implies a real interest rate of 0 percent B. 2 percent and this implies a real interest rate of 4 percent C. 4 percent and this implies a real interest rate of 2 percent D. 4 percent and this implies a real interest rate of 4 percent