Most economists:
A. oppose free trade.
B. would prefer to have no trade with other nations.
C. favor free trade.
D. have no opinion on free trade.
Answer: C
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If a firm shuts down in the short run it will
A) break even. B) suffer a loss equal to its fixed costs. C) declare bankruptcy. D) suffer a loss equal to its variable costs.
The concept of "clean enough," to an economist, means the
A. state of cleanliness where the total cost of cleaning equals the total benefit of cleaning. B. state of cleanliness where the average cost of cleaning more equals the average benefit of cleaning more. C. state of cleanliness where the marginal cost of cleaning equals the marginal benefit of cleaning. D. perfect state of cleanliness.
If Second National Bank has more rate-sensitive assets than rate-sensitive liabilities, it can reduce interest-rate risk with a swap that requires Second National to
A) pay fixed rate while receiving floating rate. B) receive fixed rate while paying floating rate. C) both receive and pay fixed rate. D) both receive and pay floating rate.
When calculating the effect of a tax cut on equilibrium GDP, the tax multiplier is always
a. 2.0 smaller than the spending multiplier b. 1.0 smaller than the spending multiplier and negative in sign c. positive d. positive and larger than the spending multiplier e. negative and larger than the spending multiplier