A law that restricts plant closings will
A. provide useful market signals to all parties in the industry.
B. prevent resources from flowing to their highest-valued uses.
C. make the economy more efficient by slowing down the movement of resources to a more optimal rate.
D. make the economy more efficient by reducing poor decisions on the part of entrepreneurs.
Answer: B
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The main problem with using the infant industries argument to justify protecting an industry from foreign competition is that
a. all industries will claim that they are infant industries in order to gain protection b. the protected industry will become too efficient and drive out foreign competition c. once in place, it is difficult to remove protection even as the industry matures d. it causes the goods that are produced in the protected industry to have lower prices e. this policy compromises national security if the infant industry produces military goods
After a particular loan has been paid off, neither the borrower nor the lender has lost purchasing power. Therefore, it must be true that actual inflation was
a. greater than expected inflation. b. equal to expected inflation. c. less than expected inflation. d. greater than the nominal rate of interest.
If the Fed sells government bonds to the public, then reserves
a. increase and the money supply increases. b. increase and the money supply decreases. c. decrease and the money supply increases. d. decrease and the money supply decreases.
Ten years ago, Veronica’s country went through a recession. Many people struggled to get by. The economy has since recovered, but many people are reluctant to spend much of their income, preferring to save as much as possible in case bad economic times return. What impact will this have on economic growth?
a. It will have little impact on growth. b. It will slow economic growth. c. It will boost economic growth. d. It will slow growth in the long term but boost it in the short term.