Use the following graph, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product, to answer the next question.
Sd + Q is the product supply curve after an import quota is imposed. A quota of y?w will
A. increase the revenues of domestic producers by areas E + F + G + H + J.
B. increase the revenues of domestic producers by areas E + F + K.
C. lower domestic price and increase domestic consumption.
D. increase the revenues of domestic producers by areas G + H.
Answer: B
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If the price of inputs rises and foreign income rises:
a. Price index rises, and real GDP falls. b. Price index rises, and the change in real GDP is uncertain. c. Price index falls, and real GDP rises. d. Price index falls, and real GDP falls. e. Price index falls, and the change in real GDP is uncertain.
Refer to Figure 5.6. Which diagram shows an increase in income with both bread and soup being normal goods?
A. A
B. B
C. C
D. D
As a result of the existence of automatic stabilizers
A. the government budget deficit will always increase during a period of economic recession. B. the economy will always tend to move toward a full-employment equilibrium. C. the government budget deficit will always increase during a period of economic expansion. D. the business cycle will no longer exist. E. None of the choices are correct.
Which of the following is correct?
A. MPC + MPS = APC + APS. B. APC + MPS = APS + MPC. C. APC + MPC = APS + MPS. D. APC - APS = MPC - MPS.