The figure below shows the market for MP3 players in a small country. Dd and Sd are the domestic demand and domestic supply curves of the MP3 players. QQ is the quota quantity. According to the figure, if import licenses are allocated based on a resource-using procedure, the loss to the economy will be
A. less than $10 million.
B. $35 million.
C. greater than $35 million.
D. $25 million.
Answer: C
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With fixed exchange rates, the adjustment to changes in international monetary conditions comes through
A) exchange rate changes. B) exchange rate changes and international money flows. C) international money flows. D) None of the above.
During the Revolutionary War, the Pennsylvania legislature attempted to help the Continental Army by enacting
a. wage floors for soldiers in the army. b. bonuses for soldiers who re-enlisted. c. laws to buy food for the soldiers stationed in Pennsylvania. d. price controls on essential commodities. e. All of the above are correct.
Economic efficiency requires that costs associated with the expansion and utilization of capital be balanced against the
a. future increases in output derived from improved tools and production methods. b. reduction in future employment due to automation. c. indirect costs of capital goods. d. need to maintain a reserve army of the unemployed.
Which of the following calculates the cost of purchasing a specific bundle of goods and services in each country and uses this measure to convert the incomes of different countries to a common currency so they may be more accurately compared?
a. the consumer price parity (CPP) method b. the purchasing power parity (PPP) method c. the GDP deflator exchange (GDPDE) method d. the inflation conversion factor (ICF) method