If the bidders at a second-price auction have true values of $8, $7, $6, and $5, the item will sell for
a. $8
b. $7
c. just over $7
d. just under $7
b
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A large country imposes capital controls that prohibit foreign borrowing and lending by domestic residents. The country is currently running a financial account surplus. The imposition of the capital controls will cause
A) net exports to decrease. B) real domestic interest rates to rise. C) real world interest rates to rise. D) desired national saving to fall.
Which of the following would be an example of passive policy making?
A) establishing a system of automatic tax stabilizers B) marginal rate tax cuts intended to increase real Gross Domestic Product (GDP) C) government spending decreases intended to decrease real Gross Domestic Product (GDP) D) none of the above
Which of the following is the correct name of the free-trade agreement between Mexico, the U.S., and Canada?
a. The American Free Trade Agreement (AFTA). b. The North American Free Trade Agreement (NAFTA). c. The Pacific Free Trade Agreement (PFTA). d. The Trans-American Free Trade Agreement (TAFA).
Consider the following events: scientists reveal that consumption of oranges decreases the risk of diabetes, and at the same time, farmers use a new fertilizer that makes orange trees more productive. Illustrate (using supply-and-demand diagrams) and explain what effect these changes have on the equilibrium price and quantity of oranges.
What will be an ideal response?