In Egypt, in 1970, the Aswan Dam was completed. By preventing the annual flood of the Nile (thereby providing millions of acres of arable land) and by providing electricity, the dam was expected to raise the living standard of the Egyptian people—and it has. However, it has also led to a rise in the water table, which causes Egypt’s limestone structures, including the pyramids, to absorb more salt water and to suffer serious erosion from crystallized salts. Combined with air pollution and traffic vibration, this erosion is turning the pyramids to dust. Economists analyze this type of problem with the concept of
A. an externality.
B. the antiquity problem.
C. a free-rider problem.
D. the public good problem.
E. the trade-off between equity and output.
Answer: A
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To keep the price at the level set by a price support, the government must
A) buy some of the good. B) sell some of the good. C) receive a subsidy from the producers. D) insure that imports are readily available. E) be careful to always set the price support below the equilibrium price.
If Japan does not have a comparative advantage in producing rice, the consequences of adopting a Japanese policy of reducing or eliminating imports of rice into their country would include: a. making the price of rice in Japan rise
b. making the real incomes of Japanese rice producers rise, but the real incomes of Japanese rice consumers fall. c. making the real incomes of non-Japanese rice exporting countries lower. d. all of the above
Suppose that you purchase a $5,000 bond that pays 7 percent interest annually and matures in five years. If you expect that the inflation rate during the next five years will be 2 percent annually, what real rate of return do you expect to earn?
a. 2 percent b. 5 percent c. 7 percent d. 9 percent
Suppose we were analyzing the Turkish lira per euro foreign exchange market. If the Euro-Area's price level falls relative to Turkey and nothing else changes, then the:
a. The supply of euros in the foreign exchange market falls, and the demand for euros in the foreign exchange market rises, causing an appreciation of the euro. b. The supply of euros in the foreign exchange market rises, and the demand for euros in the foreign exchange market falls, causing an appreciation of the euro. c. The supply of euros in the foreign exchange market rises, and the demand for euros in the foreign exchange market rises, causing an uncertain change in the value of the euro. d. The supply of euros in the foreign exchange market rises, and the demand for euros in the foreign exchange market falls, causing a depreciation of the euro. e. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate.