Subsidies are most likely to:
A. increase total economic surplus.
B. reduce consumer surplus.
C. reduce total economic surplus.
D. leave total economic surplus unchanged, but transfer surplus from producers to consumers.
Answer: C
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Suppose the natural rate of unemployment is 5 percent. If the actual unemployment rate is 4 percent, then the cyclical unemployment rate is
A) -1 percent. B) 1 percent. C) 9 percent. D) 0 percent as cyclical unemployment cannot be less than zero.
When a country suffers from a speculative attack:
A. the supply of currency available shifts right. B. it lowers the equilibrium exchange rate. C. it forces the government to spend its reserves to defend its fixed exchange rate. D. All of these statements are true.
A consequence of the economic problem of scarcity is that:
A. The production of goods and services must be controlled by the government.
B. Choices have to be made about how resources are used.
C. The production possibilities curve is bowed outward.
D. There is never too much of any good or service produced.
The lowest level of output on an average total cost curve is considered the __________ level of production.
Fill in the blank(s) with the appropriate word(s).