Is the call for protection on the basis of “infant industry” valid?
A. No, because protection has no place in industrial development.
B. No, protection is always improper.
C. Uncertain, economic theory has no answer to this question.
D. Yes, although it can be overstated and abused.
Answer: D
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If the cyclical rate of employment equals -1 percent and the actual rate of unemployment equals 8 percent, then the natural rate of unemployment must equal:
A. 7 percent. B. 12.5 percent. C. 9 percent. D. -7 percent.
Which of the following would NOT be a cause for an increased American demand for the Mexican peso?
A) The United States having lower interest rates than Mexico B) Increased American demand for Mexican goods C) The expectation by speculators that the value of the peso is edging up D) More economic expansion in the United States E) None of the above.
An decrease in the velocity of money for given levels of income and the interest rate would shift the
a. LM curve up. b. IS curve up. b. IS curve down. c. LM curve down.
Answer the following statements true (T) or false (F)
1. If the price that a firm charges is higher than its average cost of production for that quantity produced, then the firm will earn profits. Conversely, if the price that a firm charges is lower than its average cost of production, the firm will suffer losses. 2. When a firm earns losses because it does not make enough revenue to offset the increased variable costs plus fixed costs, it should remain open in the short run. 3. For a constant cost industry, whenever there is an increase in market demand and price, the supply curve shifts to the right with new firms’ entry and stops at the point where the new long-run equilibrium intersects at the same market price as before. 4. The fact that perfectly competitive markets are the most usual type of market supports the statement that, in the long run, markets will feature both productive and allocative efficiency. 5. A natural monopoly occurs when a company has control of a scarce physical resource.