An assumption behind the infant industry argument for tariff protection is that
A. foreign competitors are selling output below average cost.
B. the domestic industry will eventually gain comparative advantage in producing the good.
C. the domestic industry will be facing an upward adjustment in its average cost.
D. the market needs additional competition to satisfy consumer demand.
Answer: B
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A tax is progressive if the ratio of taxes to income rises as income rises
a. True b. False Indicate whether the statement is true or false
An increase in the supply of labor
a. increases the equilibrium wage and increases the value of the marginal product of labor. b. increases the equilibrium wage and decreases the value of the marginal product of labor. c. decreases the equilibrium wage and increases the value of the marginal product of labor. d. decreases the equilibrium wage and decreases the value of the marginal product of labor.
If TR < TC, a firm would ________ in the short run and ________ in the long run.
A. either operate or shut down; contract B. operate; contract C. shut down; contract D. shut down; expand
Suppose the economy is characterized by the following equations.IS curve: r = 20.20 - 0.002YLM curve: M/P = Y - 250(r + ?e)SRAS curve: Y = + 100(P - Pe)The nominal money supply is M = 19,800, expected inflation is ?e = 0.20, and full-employment output is 
= 10,000.(a)If the economy begins in general equilibrium, what are the equilibrium values of the price level, output, and the real interest rate?(b)If the expected price level is the price level you found in part (a), what happens to the price level, output, and the real interest rate in the short run if there's an unanticipated decrease in the nominal money supply to 14,737.5? {Hint: guess some price levels
that differ from the one you found in part (a) by increments of 0.25.}(c)If the expected price level is the price level you found in part (a), what happens to the price level, output, and the real interest rate in the short run if there's an unanticipated increase in the nominal money supply to 24,937.5? What will be an ideal response?