Discuss the differences between a tariff and a quota. Explain why quotas are considered to be a greater threat to competition than tariffs.
What will be an ideal response?
A tariff is a tax on imported goods (and a source of revenue for the government) while a quota is a limit on the quantity of a good that may be imported during some time period. Quotas are considered to be a greater threat to competition than tariffs because quotas eliminate the possibility of additional imports over the quota limit even if consumers are willing to pay higher prices for these goods. Tariffs permit the possibility of additional imports, although at higher prices.
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In 2011, the per capital output of goods and services in the United States was approximately
a. $15,000. b. $45,000. c. $8,000. d. $25,000.
Is fiscal policy more or less effective in manipulating aggregate demand in an open economy?
What will be an ideal response?
The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level), where a is a positive number, represents
a. an upward-sloping short-run aggregate supply curve b. a vertical short-run aggregate supply curve c. a downward-sloping aggregate demand curve d. None of the above is correct.
If actions by the President and Congress reduce the federal government budget deficit, then interest rates will _____, the U.S. dollar will _____, and the foreign trade deficit will _____
a. increase; appreciate; increase b. increase; depreciate; increase c. decrease; appreciate; decrease d. decrease; depreciate; increase e. decrease; depreciate; decrease