Explain the effects of an import quota on domestic production, consumption, and price
What will be an ideal response?
An import quota raises the domestic price of the product. The higher price increases domestic production and decreases domestic purchases.
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Refer to Figure 7.1. Suppose that instead of $350, Angus earns only $250 by playing the bagpipes, but all other earnings remain the same
Also, suppose the city passes an ordinance banning loud music, and this directly impacts Angus's legal ability to play his bagpipes. In this case, the Coase theorem predicts that A) Dudley will pay Angus to not play the bagpipes. B) Angus will pay Dudley so Angus can play the bagpipes. C) Dudley will do nothing and Angus will mop floors. D) no bargain can be reached between Angus and Dudley.
The WTO seems at times to be interfering in domestic policy since
A) the line between domestic policies and de factor protectionism is often fuzzy. B) it is a supra-national organization with the power to overturn governments. C) it determines which nations may trade what with whom. D) it punishes naughty nations. E) it exempts the U.S. and other powerful member nations from many of its edicts.
The individual who brings together economic resources and assumes the risk in a capitalist economy is called the:
A. stockbroker. B. banker. C. manager. D. entrepreneur.
The economy has been slowing, and the Fed wants to quickly give it a meaningful boost. However, the Fed does not want to make a public announcement or engage in a lot of political debate. Of the tools available to the Fed, which is its best option?
a. discount rate management b. interest rate changes c. reserve requirement alterations d. open market operations