Which of the following describes the infant industry argument for protectionism?
A) An industry must be protected in its early stages of development so that firms can compete with government-subsidized foreign competition.
B) Some strategic industries must be protected to ensure adequate supplies of resources needed for national defense in emergencies.
C) Domestic producers in high-wage countries must be protected from foreign producers in low-wage countries to produce a level playing field.
D) Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets.
Answer: D
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Suppose the market for coffee is in equilibrium at a price of $5 per pound. This means that:
A. any producer who sells coffee can earn a positive economic profit. B. potential producers not producing coffee have reservation prices less than $5 per pound. C. potential consumers not buying coffee value it at less than $5 per pound. D. everyone can afford to buy coffee.
Because of its ___________ effects, inflation increases social and economic tensions.
Fill in the blank(s) with the appropriate word(s).
The Federal Reserve System first began operations in:
A. 1865. B. 1914. C. 1789. D. 1934
If the central bank can act as a lender of last resort during a banking panic, banks can
A) encourage the public to borrow directly from the central bank, and this will worsen the banking panic. B) satisfy customer withdrawal needs and eventually restore the public's faith in the banking system. C) borrow more and more money from the central bank, and this will lower its reserves and decrease the public's faith in the banking system. D) call in their loans to their customers and eventually restore the public's faith in the banking system.