Which of the following statements is TRUE?
A) The infant-industry argument is valid only if the benefits of learning-by-doing in the infant industry spill over to other parts of the economy.
B) A subsidy to an infant industry is a more efficient way to protect it from foreign competition than a tariff on the competing foreign goods.
C) Both statements are true.
D) Neither of the statements is true.
C
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Suppose a country has 100 westerners and 100 easterners. A westerner can produce either 6 units of food or 2 units of national defense; an easterner can produce either 2 units of food or 1 unit of national defense
a. Show that easterners have a comparative advantage in the production of defense. b. Suppose this country has decided it wants to produce 60 units of defense. Would the country have more food to consume if the westerners produced these 60 units of defense or if the easterners produced this defense? c. Why should you have anticipated your answer to part (b) of this question? d. Now suppose this country institutes a draft and chooses people for the military randomly. Suppose further that it drafts 20 westerners and 20 easterners (who together will produce 60 units of defense). How much food will the country produce if it chooses to have a military draft? e. Compare the cost in terms of foregone food production under a draft to the cost under a volunteer army where the country pays the easterners enough to persuade them to become soldiers.
The most effective mechanism for reducing runs on banks is _____
a. the discount rate b. deposit insurance c. the reserve requirement d. open-market operations e. the Federal Reserve note
Explain how the Federal Government's attempts to control inflation can affect our current account balance
_______________________ are economists who generally emphasize the importance of aggregate supply in determining the size of the macroeconomy over the _____________.
a. Keynesian economists; long run b. Keynesian economists; short run c. Neoclassical economists; long run d. Neoclassical economists; short run