A recession in the United States will tend to cause recessions in other countries because as U.S. GDP falls, U.S.
A. tariffs will automatically rise.
B. exports will rise.
C. imports will fall.
D. exports will fall.
Answer: C
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A factor that would reduce the ability of the Social Security system to maintain current benefit levels with constant tax rates is
A. rapid real wage growth. B. reduced population growth. C. adoption of a “pay as you go” system. D. a slowdown in inflation.
Banks use credit rationing rather than simply raising the interest rate charged borrowers with higher default risks because
A) of fear of adverse selection problems. B) of interest rate ceilings in many states. C) of fear of offending the loan applicants. D) use of credit rationing is encouraged by the Federal Reserve.
An appropriate government policy toward negative externalities is to
A. subsidize the activity that creates the negative externality. B. impose a tax or fine on the activity that creates the negative externality. C. pay money to the party that creates the negative externality. D. impose a tax on recipients of the negative externality.
Which statement is false?
A. The two basic ways that unions have of exerting power is inclusion and exclusion. B. A smaller percentage of the labor force is members of unions today than 35 years ago. C. Collective bargaining is the main arena of the power struggle between labor and management. D. None of the statements are false.