In an effort to prepare for war, the Defense Department is required by Congress to stockpile helium, once used to provide lift for blimps (phased out in the 1960s). About 100 years of total U.S. usage of helium is in storage. The Pentagon agrees to buy helium from producers at a price above what would otherwise prevail in the marketplace. Is this likely to result in efficiency? Explain.
What will be an ideal response?
No. If the price is held up to provide a stockpile of helium, the price is above the market price. Society devotes more resources to helium production and storage than it would without the program, more than commercial buyers and users of helium would want to meet their needs. Society would be better off if the program ended, and the price of helium fell to a (lower) market level.
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Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting downward C. Aggregate demand shifting rightward D. Aggregate demand shifting leftward
Other things remaining the same, as U.S. imports increase, the quantity of
A) foreign currency supplied increases. B) U.S. dollars supplied decreases. C) foreign currency demanded increases. D) foreign currency demanded decreases. E) U.S. dollars demanded increases.
In the early 1980s, many people found themselves unable to purchase new homes because of:
a. rising prices and interest rates. b. rising prices and falling interest rates. c. new government restrictions on mortgages for first-time buyers. d. increases in income tax rates.
Which of the following will improve your salary bargaining position
a. Wait until the large project you were integral to is completed b. Wait until your employer has hired many others with similar skills as yours' c. Wait until your employer has invested greatly into the long-term project you lead d. At the very outset of a project that you will lead