The figure above shows the market for pants. If the government subsidizes the production of pants so that production expands from 6 million pairs to 7 million pairs,
A) there would be no deadweight loss.
B) the government's policy would have no effect on the sum of consumer surplus and producer surplus.
C) a deadweight loss would result.
D) the government's policy would increase the sum of consumer surplus and producer surplus.
E) production would be even more efficient than if 6 million pairs of pants are produced because more is always better than less.
C
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If the U.S. economy enters a recession, the
A) labor force tends to increase. B) economy experiences full employment. C) unemployment rate tends to increase. D) entire population will be partially unemployed.
Suppose that you have $100 today and expect to receive $100 one year from today. Your money market account pays an annual interest rate of 25%, and you may borrow money at that interest rate. Suppose that you borrow $60 and spend $160 today. After you repay your loan one year from today, how much money will you have available for consumption one year from today?
a. $0 b. $25 c. $50 d. $75
A pegged rate system that includes policy cooperation is usually:
A) difficult to maintain. B) a good compromise for nations who want exchange rate stability, stable output, and some flexibility. C) not a good bet for nations who are large trading partners. D) administered by large private banks.
Economic policy in the real world reflects:
A. special interest desires only. B. a balancing of cost/benefit analysis and special interest desires. C. cost/benefit analysis only. D. a complete lack of understanding of the principles of economics.