Which of the following statements is not true?
A. Trade is beneficial because it allows consumption beyond the production possibility frontier.
B. Trade is beneficial because it allows all domestic industries to increase production.
C. Trade is beneficial because it allows more efficient production.
D. Trade is beneficial because it allows consumers to buy goods at cheaper prices.
Answer: B
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Suppose a new law imposes a tax on all trades of bonds and stock. What is the likely effect on money demand?
A) Money demand declines first, then rises when inflation increases. B) Money demand rises. C) The overall effect is ambiguous. D) Money demand declines.
According to economic theory, it is often rational for a politician to support special interest groups at the expense of unorganized, widely dispersed groups (for example, taxpayers or consumers)
a. only when the gains that accrue to the special interest group exceed the costs imposed on other voters. b. when nonspecial-interest voters are unconcerned or uninformed about the issue, and campaign funds are readily available from the special interest group. c. only if the government action is socially efficient. d. only if the government action will reduce the monopoly power of business or labor and, thereby, lead to an improvement in the general welfare of consumers.
The marginal product of a variable input is
A. the second derivative of the total product function. B. zero at the point of diminishing returns. C. the change in the total product that occurs in response to a unit change in the variable input. D. the change in the average product that occurs when the variable input is increased one unit.
How does an aggregate demand curve differ from an individual demand curve?
a. An aggregate demand curve shows the quantity demanded at various prices, whereas an individual demand curve shows the quantity demanded at different price levels. b. An aggregate demand curve deals with particular goods, whereas an individual demand curve shows the quantity demanded by a single nation. c. An aggregate demand curve deals with the economy as a whole, whereas an individual demand curve shows the quantity demanded by one person. d. An aggregate demand curve shows the changes in prices of related goods, whereas an individual demand curve shows the changes in economy-wide prices.