One clear function for the government to play in an economy is to:
a. Promote research and development by providing tax breaks to domestic industries that will eventually be able to compete internationally.
b. To provide needed goods and services that otherwise would not be provided effectively and/or efficiently by the private sector.
c. Levy tariffs and other forms of protection to protect infant industries that will grow to international stature in the future.
d. Run deficits when a nation is growing and surpluses when it is contracting.
.B
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Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S2 (point B)
If there is an increase in number of companies producing motorcycles and a decrease in income (assume motorcycles are a normal good), the equilibrium could move to which point? A) A B) B C) C D) E
As the size of a nation's outstanding debt gets larger and larger relative to the size of the economy:
a. eventually it will become difficult for the country to borrow in global credit markets. b. the country will have to pay higher real interest rates in order to induce investors to purchase its bonds. c. at some point, the country will be more or less forced to bring spending into line with revenues in order to maintain the confidence of investors. d. all of these are correct.
Internal ownership of the national debt occurs when U.S. Treasury bonds are purchased by all of the following except
A. Foreign countries that we trade with. B. The Federal Reserve System. C. Individual U.S. citizens. D. State banks.
Assume a two-country, two-commodity, and two-input model. Let the two countries in this model be the United States and the Rest of the World and the two goods being produced by each of the countries be steel and wheat. The two factors of production used in producing the goods in each country are capital and land. If the United States is capital-abundant and wheat production is land-intensive, the Heckscher-Ohlin model would predict that the Rest of the World would
A. export steel and import wheat. B. export wheat and import steel. C. export both the goods to the United States. D. import both the goods from the United States.