Pegging a country's exchange rate to the dollar can be advantageous if
A) investors believe the dollar to be more stable than the domestic country's currency.
B) a country wishes to conduct independent monetary policy.
C) imports are not a significant fraction of the goods the country's consumers buy.
D) the country does not trade much with the United States.
A
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Suppose that elimination of tariffs on agricultural products means that 1,000 farm workers lose jobs that pay an average of $20,000 per year
At the same time, because of the importation of relatively cheaper foreign vegetables, 150 million consumers save $2 per year on their grocery bills. a. What is the total income lost by farm workers because of the free trade? b. What is the total dollar amount saved by all consumers combined? c. Which is greater, the lost income or the consumer savings? Do the benefits of free trade outweigh the costs in this simple example? d. Which group is most likely to become politically involved over the issue of removing the tariffs, the farm workers or the consumers? Why?
When a positive externality exists in a market, total surplus:
A. is decreased by deadweight loss compared to that same market without a negative externality. B. is the same as a market without a negative externality. C. is increased by deadweight gain compared to that same market without a negative externality. D. is the same but re-distributed differently than if that same market did not have a negative externality.
In the short run, the dominant effect of deficit reduction causes an
A. outward shift of the aggregate supply curve. B. inward shift of the aggregate supply curve. C. outward shift of the aggregate demand curve. D. inward shift of the aggregate demand curve.
If an activity results in a spillover benefit, then in a pure market economy the:
A. quantity produced is too low. B. quantity produced is too high. C. market supply is too high. D. market supply is too low.