A key difference between tariffs and quotas is that
A) consumers are hurt with quotas but not with tariffs.
B) consumers are hurt with tariffs but not with quotas.
C) the government receives revenue with tariffs, but the importer receives added profit with quotas.
D) the government receives revenue with quotas, but the importer receives added profit with tariffs.
C
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Ace has always been a top student, so it was no surprise he won a $1,500 scholarship from the company where he worked summers to help with college expenses. Ace decides to spend his scholarship money on a new Apple MacBook. How will GDP be affected by Ace's recent purchases?
A. Consumption will go up by $1,500, because a computer is a nondurable good. B. Consumption will go up by $1,500, because a computer is a durable good. C. Investment will go up by $1,500, because a computer is a durable good. D. GDP will not be affected, since Ace acquired the computer with scholarship money.
In the short run, an unanticipated shift to a more expansionary monetary policy is most likely to result in
a. an increase in short-term interest rates. b. a reduction in aggregate demand. c. a reduction in the inflation rate. d. an increase in employment.
When the interest rate is so low that the opportunity cost of holding money is zero, then economists say we have reached:
A) the era of total liquidity. B) the zero lower bound situation, which means the U.S. economy may be in a liquidity trap. C) full monetary saturation. D) a situation in which a nation must use caution, since monetary policy is "super" effective.
Refer to the above graph. What combination would most likely cause a shift from AD 1 to AD 2?
a. An increase in taxes and no change in government spending b. A decrease in taxes and a decrease in government spending c. A decrease in taxes and an increase in government spending d. An increase in taxes and an increase in government spending