Explain the economic effects of farm programs on the European Union and in the United States on world trade
What will be an ideal response?
The price support policies of the European Union led to higher trade barriers (tariffs and quotas) that restricted agricultural imports. These policies created incentives for overproduction in European agriculture and led to demands for subsidies for exports to get rid of the overproduction and to maintain farm product prices. These policies in the European Union have caused problems for American farmers because the trade barriers have made it more difficult to sell in the European market. Also, world prices for agricultural products have been depressed by the subsidized European exports, hurting incomes for American farmers and those in developing nations that produce competing crops.
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Because the United States is highly integrated with the international capital market, international capital flows tend to
A. counteract the negative effect on aggregate demand of lower interest rates. B. counteract the positive effect on aggregate demand of higher interest rates. C. strengthen the negative effects on aggregate demand of higher interest rates. D. strengthen the negative effects on aggregate demand of lower interest rates.
An optimal decision is one that is selected based on an analysis of
A. explicit costs but not implicit costs. B. implicit costs but not explicit costs. C. both explicit costs and implicit costs. D. neither explicit costs nor implicit costs.
If the marginal revenue from a quality improvement is ________ its marginal cost, it ________ profitable to produce a higher-quality product.
A) less than; is B) greater than; is C) exactly double; is not D) greater than; is not
When regulators identify with the special interests of the industry they regulate, this behavior conforms with the
A) share-the-gains, share-the-pains hypothesis. B) rate-of-return hypothesis. C) lemon market hypothesis. D) capture hypothesis.