An example of a government policy to provide a framework within which the private sector can operate productively is:
A. the taxation of savings.
B. government ownership of capital.
C. the suppression of political dissent.
D. maintaining a well-functioning legal system.
Answer: D
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If the real interest rate in the United States increases, foreign investors will ________ their demand for U.S. dollars because they desire to ________ more U.S. financial assets
A) increase; buy B) increase; sell C) decrease; buy D) decrease; sell
When the price of a good rises, there is
A) an increase in supply. B) a decrease in supply. C) a decrease in quantity supplied. D) an increase in quantity supplied.
Which of the following purported externalities in fact does not distort the allocation of resources? I. An individual's unwillingness to cut his or her own lawn in an otherwise immaculately kept neighborhood. II. Smoke produced by a new firm in an area which raises the costs of other firms. III. A new firm's bidding up skilled wages in an area, thereby raising costs of other firms. IV. An
individual's unwillingness to obtain job training, thereby lowering the total GNP. Possible choices: a. I, III, and IV. b. III and IV. c. III only. d. IV only.
People living in different countries can benefit from international trade because
a. different countries use different currencies. b. trade makes it possible for the residents of different countries to specialize in the production of those things they do best. c. trade makes it possible for people to acquire goods from foreigners cheaper than they could be produced domestically. d. both b and c are correct. e. all of the above are correct.