This graph demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good.
According to the graph shown, the change in consumer surplus brought about by the imposition of a tariff to an economy previously open to free trade is:
A. a loss of DE.
B. a gain of DE.
C. an increase of HIJKL.
D. a loss of HIJKL.
Answer: D
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The amount of money people wish to hold shows an inverse relationship to
A) the interest rate. B) their planned near-term purchases. C) the money supply. D) the income tax rate.
Which of the following is true in long-run equilibrium for a firm in monopolistic competition?
A) MC = ATC. B) MC > ATC. C) MC < ATC. D) Any of the above may be true.
______________—a term referring to the highly inelastic case of demand or supply in which a percentage change in price, no matter how large, results in zero change in the quantity; vertical when graphed.
a. Infinite elasticity b. Zero inelasticity c. Constant unitary elasticity d. Perfect elasticity
When the economy is at full employment and inflation is present, the government could create a surplus budget by cutting its own spending and raising taxes. The Fed would be expected to:
A. reduce the required reserve ratio, increase the discount rate, and buy securities on the open market. B. reduce the required reserve ratio, reduce the discount rate, and sell securities on the open market. C. reduce the required reserve ratio, reduce the discount rate, and buy securities on the open market. D. increase the required reserve ratio, increase the discount rate, and sell securities on the open market.