The figure below represents the domestic market for wheat in a small country. Imports of wheat are prohibited.
With an export subsidy of $20 per bushel, the cost to the government of paying the export subsidy is
A. $600 million.
B. $2.2 billion.
C. $3 billion.
D. $1.2 billion.
Answer: B
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
Which of the following is an ultimate objective of the Federal Reserve?
A) Real GDP growth B) M1 growth C) M2 growth D) Low interest rates
If price were set by the government at $10, there would be a price __________, that would cause a ___________ of ______ units.
A. floor; surplus; 12
B. floor; shortage; 14
C. ceiling; shortage; 12
D. ceiling; surplus; 14
The fast-food industry, from Back Yard Burgers to KFC, promises good food delivered quickly. The value of the consumer's time
A. must be discounted to make sure it is negative. B. is a key component in creating value for the firm and the consumer. C. is usually so low that fast food is unimportant in the marketplace. D. is less important than production costs.