The main problem with using the infant industries argument to justify protecting an industry from foreign competition is that:
A. all industries will claim that they are infant industries in order to gain protection.
B. the protected industry will become too efficient and drive out foreign competition.
C. once in place, it is difficult to remove protection even as the industry matures.
D. it causes the goods that are produced in the protected industry to have lower prices.
Answer: C
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Refer to Figure 10.2. If in this economy the MPC = 0.6, Y2 = $50 billion, and AE2 is $5 billion below AE1, potential GDP is
A) $53 billion. B) $55 billion. C) $58.3 billion. D) $62.5 billion.
What is the primary reason for the differences between the U.S. banking system and those in other major industrial countries?
A) Economies of scale are greater in banking in the United States than in banking in other countries. B) legislation that led to the development of state and national banks C) the Federal Reserve System D) the National Bank
Refer to the above figure. Moving from point A to point B indicates
A. a decrease in supply. B. a decrease in quantity supplied. C. an increase in supply. D. an increase in quantity supplied.
We assume that in the short run in a perfectly competitive market the:
A. price is fixed. B. number of firms is fixed. C. total quantity supplied is fixed. D. All of these are true of the short run.