Some people argue that to prevent continued dependence on foreign oil, the United States should restrict imports of foreign oil and increase domestic production. What effects would such trade restrictions have on the market for oil in the United States?
What will be an ideal response?
If the U.S. government placed a tariff on oil imports, the price of oil in the United States would rise appreciably. Higher domestic prices would spur greater oil exploration and greater use of known reserves, and a larger amount of domestic oil would be brought to market. But even though higher domestic oil prices would serve to ration demand, the policy would seriously deplete U.S. oil reserves, making the United States even more dependent on foreign oil in the future unless fuel alternatives were developed in the meantime.
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In the U.S. economy, the quantity of donuts produced each day is determined by the
A) U.S. Food and Drug Administration. B) U.S. Department of Health and Human Services. C) Donut Association of America. D) individual decisions of thousands of donut makers.
Total factor productivity growth is that part of economic growth due to
A) capital growth plus labor growth. B) capital growth less labor growth. C) capital growth times labor growth. D) neither capital growth nor labor growth.
The domestic real interest rate in a small open economy is
A) determined by the intersection of the supply curve and demand curve for loanable funds in the country. B) equal to the world real interest rate. C) the same as its nominal interest rate. D) determined by the total value of net exports in the country.
When government purchases increase, the spending multiplier indicates the _____
a. amount of movement along the aggregate demand curve b. amount of movement along the aggregate supply curve c. size of the rightward shift of the aggregate demand curve at a given price level d. size of the rightward shift of the aggregate supply curve at a given price level e. size of the expansionary gap