Price leadership:
A) has rarely occurred in U.S. history.
B) is always illegal in the United States.
C) is usually the result of a dominant firm in the industry.
D) usually results in the smaller firms in the industry incurring economic losses.
C
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The cyclical deficit is that portion of the deficit
a. that results from the economy being below the natural rate of output. b. that would exist even if the economy were at its natural rate of output. c. is a function of the level of automatic stabilizers. d. both a and c. d. None of the above
Suppose country X currently produces widgets. Then it establishes a preferential trading agreement with country Y. Following the formation of the PTA, country X no longer produces widgets and imports widgets from country Y. What has occurred?
a. There is trade diversion and a welfare gain for both country X and country Y. b. There is trade diversion, a welfare gain for country Y, and a welfare loss for country X. c. There is trade creation and a welfare gain for both country X and country Y. d. There is trade creation, a welfare gain for country Y, and a welfare loss for country X.
Taxes in the United States are automatic stabilizers in that
A. tax revenues increase when income increases, thus offsetting some of the increase in aggregate demand. B. tax revenues decrease when income increases, intensifying the increase in aggregate demand. C. the President can increase tax rates whenever he deems such policy appropriate. D. tax rates can be adjusted by Congress to counteract economic fluctuations.
When interest rates rise, the transactions demand for money usually
A. decreases. B. increases. C. decreases initially and then increases to the original position. D. does not change.