Frequently, politicians enact restrictive trade policies to protect domestic industries. How does economic theory predict this will affect the efficiency of economic organization?
When an economy is protected from international trade, firms are insulated from the competitive pressures of the world marketplace. They lose the incentive to produce efficiently, and resources are wasted producing goods that could be more cheaply acquired through trade with producers in other countries. These forces combine to slow (sometimes halt) economic growth and development.
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What is the difference between nominal and effective tax rates? What creates the distinction?
What will be an ideal response?
Some economists argue that increases in government spending are not a likely source of continued inflation because
A) increases in government spending cause reductions in other spending components. B) government spending is not created by the Fed. C) increases in government spending can be financed by money creation. D) a and b E) a and c
Figure 8-2
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In Figure 8-2, which of the following moves can be explained by an increase in government transfer payments?
A. A to B B. A to C C. A to D D. A to E
Assume that in the short run a firm is producing 100 units of output, has average total costs of $100, and average fixed costs of $20. The firm's total variable cost at this output level is
A) $120. B) $80. C) $8,000. D) $12,000.