Which of the following is among the arguments against using government intervention to reduce income inequality?
A. Allowing big rewards to go to the most successful performers helps motivate creativity, innovation, and hard work.
B. Governments cannot have much of an impact on income inequality, so there is little use in making the attempt.
C. Large income differences eventually lead to political strife and will undermine support for a market economy.
D. A wide gap between the rich and the poor tends to promote active participation in the democratic process.
Answer: A
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Using aggregate demand and aggregate supply, explain what happens in the short run if the Federal Reserve raises interest rates in the economy. Be sure to detail what happens to aggregate demand, the price level, the level of GDP, and unemployment
Assume that the economy is at full employment before the interest rate increase.
If tariffs are decreased, the long-run effect is most likely to be
a. a decrease in both U.S. imports and exports.
b. an increase in both U.S. imports and exports.
c. a decrease in U.S. imports and an increase in U.S. exports.
d. an increase in U.S. imports and a decrease in U.S. exports
The Heckscher-Ohlin theory predicts that the opening of trade between a land-abundant country and a labor-abundant country should result in
A. higher wages in the labor-abundant country and higher rents in the land-abundant country. B. higher rents and wages in both countries. C. lower rents and wages in both countries. D. higher rents in the labor-abundant country and higher wages in the land-abundant country.
If the quantity of money supplied exceeds the quantity of money demanded at a given point in time, _____
Fill in the blank(s) with the appropriate word(s).