Of the arguments for limiting trade, which one is the most appealing to economists?
A. helping an industry that is in trouble
B. protecting the profits of companies
C. preventing other countries from getting a comparative advantage by their use of environmentally irresponsible actions
D. protecting the jobs of citizens
Answer: C
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If the government could raise taxes on one good, which product should the government increase tax rates in order to raise tax revenue?
a. Cigarettes b. Alcohol c. Sodas d. None of the above
Which of the following is a characteristic of perfect competition?
A. Large barriers to entry. B. A small number of firms. C. Firms selling unique goods. D. None of the alternatives are characteristics of perfect competition.
If a lender charged a 4 percent nominal interest rate and the expected inflation rate is 1 percent, what is the difference between the real rate the lender received and the real rate the lender expected when actual inflation ended up being 1 percent?
a. 2 percent b. 4 percent c. -4 percent d. 1 percent e. 0 percent
In a market with barriers to entry:
A. the implications of Adam Smith's theory of the invisible hand can be expected to hold. B. prices will direct productive resources toward underserved markets. C. firms will earn zero economic profit in the long run. D. economic profit will not fall to zero in the long run.