Suppose x is an inferior good. Then we will overestimate the deadweight loss from taxes on consumption good x if we use the uncompensated demand curve rather than the marginal willingness to pay (or compensated demand) curve.
Answer the following statement true (T) or false (F)
False
Rationale: Uncompensated demand curves are steeper than compensated demand curves when goods are inferior. As a result, the deadweight loss would be under-estimated if the uncompensated demand curve were used to estimate the deadweight loss.
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The World Trade Organization provides for all of the following EXCEPT
A) the usage of the most favored nation clause. B) assistance in the settlement of trade disagreements. C) bilateral tariff reductions. D) multilateral tariff reductions. E) the prevention of nontariff interventions in trade.
Research supporting the new Keynesian model finds that prices are ________
A) slow to adjust to aggregate demand shocks B) changed very frequently C) changed only infrequently D) not as flexible as wages
Which of these statements are FALSE
a. If production exhibits diseconomies of scope, firm should reduce the number of products to reduce costs. b. If production exhibits diseconomies of scope, firm should increase the number of products to reduce costs. c. If production exhibits economies of scope, firm should increase the number of products to reduce costs. d. If production exhibits economies of scope, firm should increase the number of products to reduce costs.
Fed purchases of bonds from the public, called open market operations:
A. tend to increase reserves in the system leading to reductions in interest rates. B. tend to reduce the money supply because the bonds are expensive to purchase. C. tend to reduce reserves in the banking system because all the Fed gets is more bonds. D. tend to increase bond prices but generally have no effect on bank reserves.