Explain what rent seeking is and how it may reduce the benefits of industrial policies
What will be an ideal response?
Rent seeking is any activity by firms, individuals, or special interests that is designed to alter the distribution of income in their favor without adding to the amount of total income in the economy. If firms know that governments are willing to use industrial policies, they will spend resources to obtain some of the subsidies. This may require the hiring of lobbyists, economists, or engineers who will work to persuade the legislature or some other rule makers. The downside is that it uses resources but does not add to total output.
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In the decades leading to the Civil War __________ supported high protective tariffs.
A. both the North and the South B. neither the North nor the South C. only the North D. only the South
What is meant by the present bias?
What will be an ideal response?
Productivity in manufacturing sectors has risen faster than in service sectors.
Answer the following statement true (T) or false (F)
The model of aggregate demand and aggregate supply
a. is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution of resources between markets to explain aggregate relationships. b. is different from the model of supply and demand for a particular market, in that we have to separate real and nominal variables in the aggregate model. c. is a straightforward extension of the model of supply and demand for a particular market, in which substitution of resources between markets is highlighted. d. is a straightforward extension of the model of supply and demand for a particular market, in which the interaction between real and nominal variables is highlighted.