Economists generally oppose trade restrictions such as tariffs and quotas; however, if one these devices must be used, economists generally prefer tariffs to quotas
a. True
b. False
A
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Suppose real GDP is $12.1 trillion and potential GDP is $12.6 trillion. To move the economy back to potential GDP, Congress should
A) lower government purchases by $500 billion. B) raise government purchases by $500 billion. C) raise government purchases by more than $500 billion. D) lower taxes by an amount less than $500 billion. E) lower taxes by $500 billion.
"When a third party (for example, an insurance company or the government) pays all or most of the cost of a good or service, the incentive of consumers to shop for the best value per dollar spent and of producers to offer the item at an economical price is substantially reduced." This statement is
a. essentially true. b. false; consumers will still have a strong incentive to search for the most economical price even if someone else is paying the bill. c. false; producers will still have a strong incentive to keep prices low even if consumers are non-responsive to price differences among suppliers. d. false; the party paying for the good will not influence the incentive of either consumers or producers to economize.
Based solely on the graph showing the effective federal funds rate, if you were a borrower with the goal of locking in a thirty-year mortgage with a very low interest rate, which of the following years would have been the best one to take out your loan?
a. 1970
b. 1975
c. 1981
d. 2009
According to the above table, the value of the MPC is
A. 0.7. B. 0.1. C. 0.5. D. 0.9.