One of the potential problems with the public debt is that it may:
A. make income distribution more equitable.
B. lead to added taxes that reduce economic incentives.
C. decrease interest rates and increase investment spending.
D. increase the debt burden of foreign creditors.
Answer: B
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Restricting imports of Brazilian shoes will
a. raise the price of both Brazilian and domestically produced shoes b. raise the price of Brazilian shoes but lower the price of domestically produced shoes c. lower the price of Brazilian shoes but raise the price of domestically produced shoes d. lower the price of both Brazilian and domestically produced shoes e. benefit the producers of shoes in Brazil
Junior collects baseball cards. He owns one Felix Hernandez card that sells in most shops for $15. He is interested in buying a different Felix card that also sells for $15. According to behavioral economics:
A. Junior should value the two cards equally and be willing to trade one for the other. B. the availability heuristic will cause Junior to value more highly the card he doesn't have. C. the endowment effect would suggest that Junior would not be willing to trade the card he has for the card he doesn't have. D. prospect theory says he will buy the second card as both have the potential to appreciate in value.
An increase in consumers' incomes raises the equilibrium price and quantity of fine clothing
Indicate whether the statement is true or false
Private ownership and competitive markets are important for economic growth because they provide individuals with a strong incentive to
a. care for resources and use them beneficially. b. innovate and introduce new products that are highly valued relative to their cost. c. produce goods efficiently. d. all of the above are correct.