The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. We can conclude that Aquilonia's new free-trade policy has
a. increased consumer surplus and producer surplus in the incense market.
b. increased consumer surplus in the steel market and left producer surplus in the rug market unchanged.
c. decreased consumer surplus in both the steel and rug markets.
d. decreased consumer surplus in the steel market and increased total surplus in the incense market.
d
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If the Fed decreases the money supply, we should expect the interest rate
a. to fall, spending on automobiles and business investment spending to rise, and the price of bonds to increase b. to rise, spending on automobiles and business investment spending to fall, and the price of bonds to decrease c. to rise, spending on automobiles and business investment spending to fall, and the price of bonds to increase d. to fall, spending on automobiles and business investment spending to fall, and the price of bonds to decrease e. to rise, spending on automobiles to fall, business investment to rise, and the price of bonds to decrease
When the economy is in equilibrium, there will be no unemployment or inflation
Indicate whether the statement is true or false
Economists segment the business cycle into phases and the phase characterized by a relatively high level of real GDP, full employment, and inflation identifies
a. recovery b. demand-pull inflation c. stagflation d. expansion e. prosperity
The social cost of production equals
A. the external cost minus the private benefit. B. the external cost minus the external benefit. C. the private cost plus the external cost. D. the social cost plus the private cost.