The purpose of the Freedom to Farm Act of 1996 was to:
A. immediately end U.S. farm subsidies.
B. end 60 years of U.S. price supports for American grain crops.
C. eliminate U.S. tariffs and quotas on imported farm goods.
D. stabilize short-run crop prices.
Answer: B
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The efficient quantity of a public good is the quantity that sets the marginal social benefit from the good equal to the good's marginal social cost
Indicate whether the statement is true or false
Exhibit 14-2 Aggregate supply and demand curves
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In Exhibit 14-2, the change in equilibrium from E1 to E2 represents:
A. cost-push inflation. B. demand-pull inflation. C. price-push inflation. D. wage-push inflation.
Three candidates for political office disagree over the benefits of enlarging the federal budget deficit. Candidate X says the stimulation package is needed to increase employment and real GDP; Candidate Y says it will only cause higher prices; and Candidate Z says it will have no effect on either real GDP or the price level. How do the three candidates differ with respect to the condition of the economy and the effects of fiscal policy?
A. Candidate X thinks the economy is below the full-employment real GDP and that the short-run aggregate supply curve is horizontal. Candidate Y believes the economy is at full employment. Candidate Z believes the expansionary policy will result only in direct fiscal offsets. B. Candidate X thinks the simple Keynesian model is applicable, while Y thinks the expansionary policy will fully crowd out private investment. Z believes the economy is experiencing a recessionary gap. C. Candidate X thinks the simple Keynesian model is applicable; Y thinks the short-run aggregate supply curve is horizontal; and Z thinks the expansionary policy will generate lower interest rates. D. Candidate X thinks the short-run aggregate supply curve is upward sloping; Y thinks interest rates will rise; and Z thinks the economy is at full employment.
If the GDP deflator is 142, by how much have prices changed since the base year?
A) Prices have increased by 42%. B) Prices have increased by 142%. C) Prices have decreased by 4.2%. D) Prices have increased by 58%.